Suppose a Firm Incurred Explicit Costs of $900 and Implicit

question 62

Multiple Choice

Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day.If that day the firm sold 8 units at $300 per unit its accounting profits are:

• A) $1,500 and its economic profits are $1,700
• B) $1,500 and its economic profits are $1,300
• C) $1,300 and its economic profits are $1,700
• D) $1,300 and its economic profits are $1,300

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Definitions:

A Premium

An amount paid exceeding the nominal or face value of a security or insurance policy.

Effective Yield

Effective yield is an investment's annual rate of interest when compounding occurs more often than once a year.

Present Value Factors

A factor used to calculate the present value of a future amount, considering the time value of money and interest rates.

Bond Carrying Value

The net book value of a bond on the issuer's balance sheet, calculated as the bond's face value minus any unamortized discounts or plus any unamortized premiums.