If a Firm Has Total Revenue of $200 Million, Explicit

question 118

Multiple Choice

If a firm has total revenue of $200 million, explicit costs of $190 million and implicit costs of $10 million, its economic profit is:

• A) $200 million.
• B) $70 million.
• C) $10 million.
• D) $0 million.

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Definitions:

Price-Setting Process

The procedure companies use to determine the price at which they will sell their products and services, taking into account costs, demand, competition, and profit objectives.

Pricing Objectives

Goals that a company wants to achieve through its pricing strategies, including maximizing profit, increasing market share, or positioning the product.

Strategic Decisions

High-level choices made by senior management that set the long-term direction and objectives of an organization.

Pricing

The process of determining the monetary value at which a good or service will be sold in the market.