A firm's economic profit includes all opportunity costs incurred by the firm. True False
A firm's economic profit includes all opportunity costs incurred by the firm.
| True |
| False |
Homework Answers
True. Economic profit includes not only the accounting costs but also the opportunity cost. Opportunity cost is the cost of the next best alternative foregone.
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A firm's economic profit includes all opportunity costs incurred
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A firm is making an economic loss of $100,000. This means that: the firm's revenues are...
A firm is making an economic loss of $100,000. This means that: the firm's revenues are less than its opportunity costs. the firm is not making an accounting profit. the firm should immediately exit the industry. the firm could increase economic profit if its resources were used in a different way. If a firm is making an economic profit of zero: it will have unhappy stockholders. it is not making an accounting profit. the firm should change to a different...
Accountants calculate A. the opportunity cost of all the resources the firm uses. B. economic depreciation...
Accountants calculate A. the opportunity cost of all the resources the firm uses. B. economic depreciation as part of the firm's cost. C. depreciation using Internal Revenue Service rules. D. all the firm's implicit costs but only a few of its explicit costs. E. All of the above answers are correct.
True or False: -If bankruptcy costs are only incurred once the firm is in bankruptcy and...
True or False: -If bankruptcy costs are only incurred once the firm is in bankruptcy and its equity is worthless, then these costs will not affect the initial value of the firm. -In a perfect market, if a change in leverage raises a firm’s earnings per share, the firm’s value rises. Which company has higher debt ratio? Company with risky and intangible assets v.s. with tangible and safe assets. Company paying heavy taxes v.s. low taxes Profitable...
Indicate if the following questions are True or False. Explain “Why” your answer is True or False. It is good to incur high opportunity costs for an activity one is engaged in. Why? Price of elastici...
Indicate if the following questions are True or False. Explain “Why” your answer is True or False. It is good to incur high opportunity costs for an activity one is engaged in. Why? Price of elasticity measures vary along the demand curve. Why? Employing economic cost/profit instead of accounting cost/profit when making business decisions tend to generate more efficient or superior economic results for firms. Why? Firms do not try to maximize their output. Why?
There is a tendency for economic profit in all competitive industries to go to zero. Question...
There is a tendency for economic profit in all competitive industries to go to zero. Question 25 options: a) True b) False If the market price in a competitive market is $10, and a firm's marginal cost (MC) is given by MC = 0.50Q, where Q is units of output, this firm should produce 20 units of output to maximize profit. Question 14 options: a) True b) False As entrepreneurs move resources into and out of industries seeking higher profit...
1. True or False? The larger the firm's TIE ratio, the less times a firm can...
1. True or False? The larger the firm's TIE ratio, the less times a firm can pay its interest expenses. 2. True or False? Your firm has a debt to equity ratio of 55%, and its biggest competitor has a debt to equity ratio of 66%. Based on this information, your firm is less levered. 3. True or False? A dividend payout ratio larger than 50% indicates a firm retains more than it pays out to shareholders. 4. True or...
20. A firm's economic profit is equal to producer surplus when A. average variable costs are...
20. A firm's economic profit is equal to producer surplus when A. average variable costs are minimized. B. average fixed costs are spread over a large amount of production. C. the firm has no fixed costs. D. total revenues equal total variable costs.
Which of the following statements is true? Group of answer choices Economic profits include opportunity costs....
Which of the following statements is true? Group of answer choices Economic profits include opportunity costs. Economic profits ignore opportunity costs. Accounting profits include all of the opportunity costs. Economists consider sunk costs in their decision making
A firm is making an economic loss of $100,000. This means that: - the firm should...
A firm is making an economic loss of $100,000. This means that: - the firm should immediately exit the industry. - the firm could increase economic profit if its resources were used in a different way. - the firm is not making an accounting profit. - the firm's revenues are less than its opportunity costs. If a firm is making an economic profit of zero: - it will have unhappy stockholders. - it cannot make a higher economic profit by...
1. Zero economic profit means that The firm breaks down The firm makes just normal profits...
1. Zero economic profit means that The firm breaks down The firm makes just normal profits The firm must close down The firm must raise the price of the commodity All of the above 2. Normal Profit is: The opportunity cost of capital committed in a certain line of business The profit any firm makes in the market The minimum capital return required in order to stay in a certain type of business (a) and (c) All of the above...
A firm is making an economic loss of $100,000. This means that: the firm's revenues are less than its opportunity costs. the firm is not making an accounting profit. the firm should immediately exit the industry. the firm could increase economic profit if its resources were used in a different way. If a firm is making an economic profit of zero: it will have unhappy stockholders. it is not making an accounting profit. the firm should change to a different...
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