Question

Please answer all.

82. What is the difference between the accountant's concept of profit and the economist's view of profit?

83.   Describe the types of entry barriers which can exist and their importance to the study of monopoly.

Answer 1

1. The main distinction between accounting profit and economic profit is that accounting profit refers to profits reported in the financial books, which are measured by deducting all the actual costs incurred relating to cash costs from the sales and other sales produced by the business operations, while economic profit refers to the benefit measured in the sense of co-operation. Accounting benefit refers to the gross revenue minus overt expenditures (deductible expenses) Economic profit means subtracting both Implied expenses and Overt expenses from the net profits. Implicit costs are the opportunity costs which can not be calculated and which are not included in the account books.

Accounting profit is a company's actual benefit / realization during an accounting year, while economic profit refers to an extraordinary benefit, i.e. profits over what is needed to offset the expenses. That includes cost of opportunity.
Accounting profit is usually more than economic profit because economic benefit can often include several categories of revenue and expenditure followed by related assumptions.

2. Monopolies continue to gain large economic benefits because of the lack of competition. Such profits would attract robust competition as we defined in Perfect Competition, and yet they do not do so because of one particular monopoly characteristic. The legal, technical, or market forces that deter or prohibit potential competitors from entering a market are barriers to entry. Barriers to entry, such as the cost of renting retail space, can vary from simple and easy to overcome to the highly restrictive.

The government is erecting barriers to entry for certain goods by banning or restricting competition. In U.S. rule, none other than the U.S. Postal Service is constitutionally permitted to distribute mail of first class. Many states or cities have laws or legislation that require households to choose to pick up the garbage from only one electric company, one water company and one. Most legal monopolies are socially beneficial utilities — products required for daily life. As a result, the government encourages manufacturers to become controlled monopolies, ensuring consumers have access to sufficient quantities of such goods or services.