This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Why is it not a contradiction to say that a firm is simultaneously earning an accounting profit but ... (Read 117 times)

rmenurse

  • Hero Member
  • *****
  • Posts: 513
on: Jun 29, 2018
Why is it not a contradiction to say that a firm is simultaneously earning an accounting profit but suffering an economic loss?
 
  What will be an ideal response?

Question 2

Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for 2 per dozen. Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is 1.75 .
 
  What level of profit is this firm earning? Explain.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Danny Ewald

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jun 29, 2018
Answer to Question 1

Accounting profit is determined by taking total revenue and subtracting explicit costs only. Economic profit is determined by taking total revenue and subtracting all economic costs which include explicit and implicit costs. Therefore, this statement is not a contradiction.

Answer to Question 2

Maxine's Cookie Shop is earning profits of 50 per day. This can be calculated by taking total revenue (2 x 200 = 400) and subtracting total cost (1.75 x 200 = 350).


rmenurse

  • Member
  • Posts: 513
Reply 2 on: Jun 29, 2018
Wow, this really help

Dominic

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

The U.S. Pharmacopeia Medication Errors Reporting Program states that approximately 50% of all medication errors involve insulin.

Did you know?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

Did you know?

Pink eye is a term that refers to conjunctivitis, which is inflammation of the thin, clear membrane (conjunctiva) over the white part of the eye (sclera). It may be triggered by a virus, bacteria, or foreign body in the eye. Antibiotic eye drops alleviate bacterial conjunctivitis, and antihistamine allergy pills or eye drops help control allergic conjunctivitis symptoms.

Rebound Tenderness, Apply Firm Pressure to the Abdomen Rebound Tenderness, Apply Firm Pressure to the Abdomen
Work Settings for People Earning Master’s and Bachelor’s Degrees in Psychology Work Settings for People Earning Master’s and Bachelor’s Degrees in Psychology
Abdominal thrusts are delivered with a firm thrust into the patient’s abdomen with an upward ... Abdominal thrusts are delivered with a firm thrust into the patient’s abdomen with an upward ...
Accounting Accounting
Intermediate Accounting (Gordon/Raedy/Sannella) Intermediate Accounting (Gordon/Raedy/Sannella)
Cost Accounting 14 Cost Accounting 14
Video: Primate Evolutionary Tree Animation

For a complete list of videos, visit our video library