Generally When Calculating Profits as Total Revenue Minus Total Costs

question 22

Multiple Choice

Generally when calculating profits as total revenue minus total costs, accounting profits are larger than economic profits because economists take into account

• A)only explicit costs.
• B)only implicit costs.
• C)both explicit and implicit costs.
• D)both types of profits are always equal because they account for the same costs.

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Definitions:

Profit-Maximizing Number

The output level at which a business achieves the highest possible profit, determined by analyzing costs and revenue functions.

Profit-Maximizing Firm

A business entity that seeks to achieve the highest possible profits through its operations and strategies.

Wage Rate

The amount of money paid to a worker per unit of time (hour, day, etc.) in exchange for labor.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource or factor of production.