The Difference Between a Firm's Total Revenues and Total Costs

question 49

Multiple Choice

The difference between a firm's total revenues and total costs when all explicit and implicit costs are included is the firm's

• A) economic profit.
• B) accounting profit.
• C) opportunity cost of capital.
• D) long-run average total cost.

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Definitions:

Shoeleather Costs

The increased costs of transactions caused by inflation, such as the time and effort spent to avoid holding onto cash that is rapidly losing value.

Redistributional Effects

The impact of policies or economic conditions on the distribution of income or wealth among the population, potentially altering inequality levels.

Unexpected Inflation

Unexpected inflation denotes the rate at which the general level of prices for goods and services rises, and subsequently, purchasing power falls, beyond what was anticipated.

Central Bank

The principal monetary authority of a country, responsible for regulating the money supply, issuing currency, and controlling interest rates.