In an economy consisting of only two goods, corn and cloth, the amount of extra cloth that can be produced efficiently if corn output is reduced by one unit is equal to
a. the rate of technical substitution for corn divided by the rate of technical substitution for cloth.
b. the rate of technical substitution for cloth divided by the rate of technical substitution for corn.
c. the marginal cost of producing cloth divided by the marginal cost of producing corn.
d. the marginal cost of producing corn divided by the marginal cost of producing cloth.
d
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Refer to the diagram, representing Slippery Slope Oil Company. A $5 decrease in the user cost would:
A. decrease the optimal quantity extracted in the present.
B. increase the optimal quantity extracted in the present.
C. not affect the optimal quantity extracted in the present.
D. reduce extraction costs in the present.
What is the difference between economic profit and accounting profit?
a. Economic profit considers implicit and explicit costs; accounting profit considers only explicit costs. b. Accounting profit considers implicit and explicit costs; economic profit considers only implicit costs. c. Economic profits do not consider implicit costs; accounting profits do not consider explicit costs. d. Accounting profits consider production costs; economic profits consider administration costs.