If a Firm Has Implicit Costs as Well as Explicit

question 21

Multiple Choice

If a firm has implicit costs as well as explicit costs

• A)accounting profits are greater than economic profits.
• B)economic profits will always be greater than accounting profits.
• C)accounting profits will be equal to economic profits.
• D)the firm has no economic profits.

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Definitions:

Base Year

A specific year against which economic growth is measured, serving as a standard point of reference for real value comparisons.

GDP Deflator

A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, typically used as an indicator of inflation.

Inflation

The economic condition characterized by a general increase in prices and fall in the purchasing value of money over time.