When Calculating a Firm's Profit, an Economist Will Subtract Only

question 277

Multiple Choice

When calculating a firm's profit, an economist will subtract only

• A)explicit costs from total revenue because these are the only costs that can be measured explicitly.
• B)implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured.
• C)the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm.
• D)the marginal cost because the cost of the next unit is the only relevant cost.

---

Definitions:

Profitability

The ability of a business to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Distribution Channel

The pathway through which goods and services travel from the producer to the consumer, including any intermediaries such as distributors, wholesalers, and retailers.

International Markets

Marketplaces beyond a company's home country borders where it can engage in trade or offer its products and services.

Competitive Advantage

A unique attribute or condition that allows an entity to outperform its competitors.