Suppose a Professor Gives Up Her Teaching Job to Devote

question 137

Multiple Choice

Suppose a professor gives up her teaching job to devote her time to writing textbooks. If salaries of professors rise,

• A) her accounting profit will rise.
• B) her accounting profit will fall.
• C) her explicit costs will rise.
• D) her economic profit from textbooks will fall.
• E) her economic profit from textbooks will rise.

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Definitions:

FIFO Cost Flow

An inventory valuation method where the cost of the earliest goods purchased are the first to be recognized as cost of goods sold.

Net Income

This refers to the amount of money a company earns after subtracting all its expenses, taxes, and costs from its total revenue.

Ending Inventory Value

The total value of all the goods available for sale at the end of a financial period.

LIFO Periodic

An inventory accounting method where the last items purchased are the first ones used in costing inventory, applied at the end of the accounting period.