Which of the Following Statements Is True Concerning Economic Profits

question 52

Multiple Choice

Which of the following statements is true concerning economic profits?

• A)They are always positive.
• B)They are equal to profits as measured by an accountant.
• C)They are always zero.
• D)They are revenue over and above all costs including implicit costs.

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Definitions:

Total Costs

The sum of all expenses a firm incurs in the production of goods or services, including both fixed and variable costs.

Average Fixed Cost

The constant expenses associated with production, which remain unchanged regardless of output levels, divided by the output quantity.

Average Variable Cost

The total variable costs divided by the quantity of output produced, reflecting the cost for each unit excluding fixed costs.

MP

Short for Marginal Product, which is the additional output resulting from using one more unit of a particular input, holding other inputs constant.