please explain the answer: Suppose that a firm produces 1,500 units a year and s
ID: 1120976 • Letter: P
Question
please explain the answer:
Suppose that a firm produces 1,500 units a year and sells them all for $4.00 each. The explicit costs of production are $4,000 and the implicit costs of production are $999. The firm has an accounting profit of
Question 11 options:
$10,999 and an economic profit of $10,000
$2,000 and an economic profit of $1,001
$0 and an economic profit of $2,000
$1,001 and an economic profit of $5,001
A)$10,999 and an economic profit of $10,000
B)$2,000 and an economic profit of $1,001
C)$0 and an economic profit of $2,000
D)$1,001 and an economic profit of $5,001
Explanation / Answer
Accounting profit = total revenue - explicit costs
TR = 1500*4 = $6,000
Accounting profit = $6000 - $4000
= $2000
Economic Profit = total revenue - total costs
= 6000 - 4000- 999
=$1,001
Therefore $2000 and an economic profit of $1001 is the answer
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