Which of the Following Is Most Likely to Be True

question 80

Multiple Choice

Which of the following is most likely to be true of economic and accounting profits?

• A) Economic profits are less than accounting profits.
• B) Accounting profits are less than economic profits.
• C) Economic profits plus accounting profits equal zero.
• D) Accounting profits minus economic profits equal zero.

---

Definitions:

Price Determination

The process by which the prices of goods and services are established based on supply and demand conditions.

Supply and Demand

The fundamental economic model describing how prices vary as a result of a balance between product availability and the desire of buyers.

Quantity Demanded

The aggregate quantity of a product or service that buyers are prepared to buy at a specific price point.

Demand Decreased

A situation where there is a reduction in the quantity of a product or service that consumers are willing or able to buy at given prices.