Accounting profit and economic profit.

Question

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Answer 1

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

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Students have asked these similar questions

Xavier opens up a lemonade stand for two hours.He spends $10 for ingredients and sells $60 worth of lemonade.In the same two hours,he could have mowed his neighbor's lawn for $40.Xavier has accounting profit of________and economic profit of ________.a.$50 $10 b.$90 $50 c.$10 $50 d.$50 $90

Suppose that a firm produces 100 units a month and sells them all for $5 each. The explict costs of production are $200 and the implicit costs of production are $250. Based on this information, the firm has an accounting profit of ___________ and an economic profit of ___________. a. $450; $300 b. $300; $50 c. $50; $300 d. $300; $45.

Amal quits his job and gives up a salary of $50,000 per year to start software company. During Amal's first year in business, total revenue is $300,000, and his explicit financial costs are $250,000. What is Amal's economic profit from his first year in business? Select one: a. $0 b. $250,000 c. $50,000 d. $300,000

Answer 2

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Answer 6

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Answer 7

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Answer 13

Ch. 13.1 - Prob. 1QQ Ch. 13.2 - Prob. 2QQ Ch. 13.3 - Prob. 3QQ Ch. 13.4 - Prob. 4QQ Ch. 13 - Prob. 1CQQ Ch. 13 - Prob. 2CQQ Ch. 13 - Prob. 3CQQ Ch. 13 - Prob. 4CQQ Ch. 13 - Prob. 5CQQ Ch. 13 - Prob. 6CQQ

Accounting profit and economic profit.

Accounting profit and economic profit.

Answer to Problem 1CQQ

Explanation of Solution

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Chapter 13 Solutions