Question

In: Economics

What does economic profit mean?

What does economic profit mean?

Solutions

Expert Solution

Economic profit is the difference between revenue received from sale of goods and services and the cost of all inputs used in the production as well as the opportunity cost.

Economic profit takes into account both Explict costs and implicit costs.


Related Solutions

Explain the difference between accounting and economic profit. What does zero economic profit mean
Explain the difference between accounting and economic profit. What does zero economic profit mean
When Economic Profit = 0, then what does this mean? 1-This means that all firms are...
When Economic Profit = 0, then what does this mean? 1-This means that all firms are operating at a loss. The best thing to do next would be to raise prices to cover the losses. 2-There is no motivation for the firms to leave the industry and there is no motivation for new firms to enter the industry. 3-Everyone run for the exit doors! Everyone in the industry is crazy if they don’t get out of an industry like this...
1. Does earning a normal profit or when economic profit = 0 mean a firm is...
1. Does earning a normal profit or when economic profit = 0 mean a firm is not earning a profit? Explain. 2. Why can there be excess profits in the short run but not in the long run? Thank you!
What does it mean when a firm earns zero economic profit? Should it shut down? Use...
What does it mean when a firm earns zero economic profit? Should it shut down? Use the concepts of direct and imputed costs in your answer.
What does Gulf economic integration mean?
What does Gulf economic integration mean?
What does gross profit represent? [NOT the calculation, but rather what does it “mean”…] Given this,...
What does gross profit represent? [NOT the calculation, but rather what does it “mean”…] Given this, how would gross profit (also known as gross margin) be computed for a service organization? What might it mean to have a decline in unearned revenues in the current year if the company is a magazine publisher? Explain why the amount of retained earnings reported on the balance sheet is often not the net amount of all accumulated earnings (and losses) less all accumulated...
what does “economic policy is health policy” mean
what does “economic policy is health policy” mean
What does globalisation mean in and how does it relate to economic transformation
What does globalisation mean in and how does it relate to economic transformation
Does Putin’s Russia have a “market economic system”? What does that mean, and how does it...
Does Putin’s Russia have a “market economic system”? What does that mean, and how does it differ from the alternative? What are the key (defining) characteristics of the present Russian economic system? How does this system affect the performance of the Russian economy and the economic welfare of the Russian people? What are the principle challenges/problems faced by that system?
What does it mean for a business to earn “normal” profit? What can be said about...
What does it mean for a business to earn “normal” profit? What can be said about the company’s accounting profit if it is earning normal profit? Imagine that you had a business like Kismet. How much accounting profit would you need to make in order to make "normal profit" (also called "zero economic profit")? This number is personal to you...everyone's answer will be different. Explain why you would require that much accounting profit (and why less accounting profit is not...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT