Which of the Following Would Explain Why Economic Profit Might

question 180

Multiple Choice

Which of the following would explain why economic profit might be less than accounting profit?

• A)A firm's net income is less than its accounting profit.
• B)A firm has only explicit costs.
• C)A firm's net income is greater than its accounting profit.
• D)A firm has implicit costs as well as explicit costs.

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Definitions:

Maturity Value

The total amount that will be paid to an investor at the date of maturity of a financial instrument, including principal and any accrued interest.

Loss

The negative financial result from a business's operations when costs exceed revenues.

Issuing Bonds

The process by which a company or government raises capital by selling bonds to investors, incurring debt that must be repaid over time with interest.

Stockholders

Individuals or institutions that own at least one share of a company's stock, essentially owning a portion of the company.