A firm\'s A. implicit cost is its monetary cost whereas its explicit cost is its

Question

A firm's A. implicit cost is its monetary cost whereas its explicit cost is its nonmonetary opportunity cost. O B. explicit cost is its monetary cost whereas its implicit cost is its nonmonetary opportunity cost ° C. explicit cost is equal to its sunk cost whereas its implicit cost is its out of pocket cost O D. explicit cost is its nonmonetary opportunity cost whereas its implicit cost is equal to is sunk cost. All of the following statements are true, except O A. a firm maximizes profit when total cost equals total revenue B, a firm earns an accounting profit when its revenues are greater than its taxes and operating expenses. C. economic profits are less than accounting profits. O D. a firm earns an economic profit when its revenues are greater than all of its implicit and explicit costs

Explanation / Answer

1) Solution: explicit cost is its monetary cost whereas its implicit cost is its nonmonetary opportunity cost

Explanation: Explicit costs are costs that occur in monetary terms; and on contrary implicit costs are opportunity costs (non-monetary cost)

2) Solution: a firm maximizes profit when total cost equals total revenue

Explanation: Firm maximizes profit at the output level where the difference between total revenue and total cost is highest

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