A Firm Has Explicit Costs of $110,000 and Total Revenue

question 242

Multiple Choice

A firm has explicit costs of $110,000 and total revenue of $120,000.Which of the following is true about the firm?

• A) The firm might be making an economic profit but we need more information about implicit costs to know for sure.
• B) The firm is definitely making an economic profit because it must be minimizing its opportunity cost.
• C) The firm is incurring an economic loss if implicit costs are $10,000.
• D) The firm is making a normal profit if implicit costs are $0.
• E) The firm may be making an economic profit but only if implicit costs are negative.

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Definitions:

Behavioral Economic Theories

A branch of economics that studies how psychological, social, and emotional factors affect economic decisions.

Rational Decisions

Choices made based on logical reasoning and objective analysis of available information and alternatives.

Behavioral Economics

A domain within economics focused on analyzing how elements such as psychology, cognition, emotions, culture, and societal factors impact choices related to the economy.

Biology

The scientific study of life and living organisms.