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Author Question: What are the items that make opportunity cost differ from the accountant's measure of cost? What ... (Read 117 times)

notis

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What are the items that make opportunity cost differ from the accountant's measure of cost?
 
  What will be an ideal response?

Question 2

Health insurance companies impose deductibles on policies and co-payments on claims
 
  A) to reduce moral hazard problems. B) to increase prices.
  C) to increase sales. D) to reduces sunk costs.



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ebonylittles

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Answer to Question 1

A firm's opportunity cost includes the cost of using resources bought in the market, owned by the firm and supplied by the firm's owner. Economists and accountants both include the price of resources bought in the market as costs. But accountants omit costs included by economists. For instance, use of a building the owner has already purchased has an opportunity cost that accountants do not include. Additionally the normal profit, interest foregone, and economic depreciation are other opportunity costs not recorded by an accountant.

Answer to Question 2

A





 

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