If a firm with a constant returns to scale production function pays all factors their marginal products, then:
A. economic and accounting profits are both zero.
B. economic profit is zero and accounting profit is positive.
C. economic profit is positive and accounting profit is zero.
D. economic and accounting profit are both positive.
Ans: B. economic profit is zero and accounting profit is positive.
You might also like to view...
The gross domestic product of a small country is $4,150,000 and the size of its employed labor force is 5,000. The income per worker of the country is ________
A) $620 B) $213 C) $830 D) $445
A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 33 percent chance the recession will end in six months and profits will return to $100 million. However, there is a 67 percent chance the recession will not end in six months, resulting in a $7 million loss. The standard deviation of profits over the next six months is:
A. $0 million. B. $57.40 million. C. $28.31 million. D. $50.31 million.