Steve and Karen Decide to Attend the Same Concert When

question 167

Multiple Choice

Steve and Karen decide to attend the same concert when each is given a free ticket to it.We know that

• A)both bear the same opportunity cost because they are making the same choice.
• B)both bear the same opportunity cost because the tickets have the same face value.
• C)both bear an opportunity cost but the its value depends on what each person is giving up to attend the concert.
• D)neither bears an opportunity cost since the tickets were given to them for free.

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Definitions:

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, indicating the extra income earned over what could have been earned in the next best alternative.

Accounting Profits

The sales revenues minus the expenses of a firm over a designated time period, usually one year. Accounting profits typically make allowances for changes in the firm’s inventories and depreciation of its assets. No allowance is made, however, for the opportunity cost of the equity capital of the firm’s owners, or other implicit costs.

Zero

Zero is a numerical value representing the absence of any quantity or magnitude; it plays a central role in mathematics and economics.

Corporate Form

A legal structure for a business, recognized by law as separate from its owners, with its own rights, privileges, and liabilities.