Suppose That a Business Incurred Implicit Costs of $200,000 and Explicit

question 197

Multiple Choice

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were

• A)$100,000 and its economic profits were $0.
• B)$200,000 and its economic profits were $0.
• C)$100,000 and its economic profits were $100,000.
• D)$0 and its economic loss was $200,000.

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Definitions:

Predict

To make an educated guess about the future based on existing information or trends.

Price and Output Policy

Strategies adopted by firms or the government to determine the prices of goods and services and the level of production to meet economic objectives.

Cartel Members

Firms or countries that coordinate together to control prices and production in an industry, limiting competition.

Incentive to Cheat

Motivations or circumstances that encourage individuals or entities to break rules or agreements for personal gain.