Suppose That During a Given Time Period the Implicit Cost

question 360

Multiple Choice

Suppose that during a given time period the implicit cost for a business was $1,500 and that the explicit cost was $6,000. Also suppose that the firm sold 1,000 units of its products at $7 per item. We can conclude that the firm's

• A) accounting profit was $1,000, and its economic profit was -$500.
• B) accounting and economic profits were both $1000.
• C) accounting profit was -$500, and economic profit was $1,000.
• D) accounting profit was $1000, and economic profit was -$1,500.

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Definitions:

Boston Tea Party

The incident on December 16, 1773, in which the Sons of Liberty, dressed as Indians, dumped hundreds of chests of tea into Boston Harbor to protest the Tea Act of 1773. Under the Tea Act, the British exported to the colonies millions of pounds of cheap—but still taxed—tea, thereby undercutting the price of smuggled tea and forcing payment of the tea duty.

Battle of Alamance

A pre-American Revolutionary War conflict in 1771 between local militia and a group of rebels known as Regulators in North Carolina, symbolizing growing colonial unrest.

Regulators

Individuals or bodies that control, monitor, or supervise specific activities or industries, ensuring compliance with laws and standards for the public good.

Sons of Liberty

A group of American patriots during the late 18th century, known for their radical actions against the British tax policies leading to the American Revolution.