Since It Is Always a Negative Number, Economists Use the Convention

question 22

Multiple Choice

Since it is always a negative number, economists use the convention of taking the absolute value of:

• A) the elasticity of total revenue.
• B) the price elasticity of surpluses .
• C) the price elasticity of shortages .
• D) price elasticity of demand.

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Definitions:

Economic Profits

The surplus gained by a firm when total revenue exceeds total costs, including both explicit and implicit costs, reflecting the financial advantage of a particular course of action.

Accounting Profits

The total revenue of a business minus explicit costs; also known as net income.

Production Costs

The total expenses incurred in the manufacturing or creation of a product or service.

Economic Profit

The difference between total revenue and total costs, including both explicit and opportunity costs, indicating true profitability.