Question

In: Economics

1A) The difference between a firm's total revenues and total costs when all explicit and implicit...

1A)

The difference between a firm's total revenues and total costs when all explicit and implicit costs are included is the firm's:

a.

opportunity cost of capital.

b.

accounting profit.

c.

economic profit.

d.

long-run average total cost.

1B)

The average fixed cost of a firm equal:

a.

implicit costs divided by output.

b.

total cost minus variable cost.

c.

explicit costs divided by output.

d.

total cost minus total variable cost divided by output.

Solutions

Expert Solution

Q1A)
Option c
Economic profit
An economic profit =total revenue -explicit costs-implicit costs
so the difference is an economic profit.
-----------------
Q1B)
option d
total cost minus total variable cost divided by output.
Average fixed cost =fixed cost/quantity
fixed cost =total cost -total variable cost
so
AVC=(TC-TVC)/Q


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