Which is greater -- economic profit or accounting profit?
Economic profit = Accounting profit - Implicit costs. Economic profit could be equal to accounting profit if there were no implicit costs, but in the presence of implicit costs, accounting profit will be greater than economic profit.
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An increase in the working-age population results in a
A) rightward shift of demand for labor curve and an increase in potential GDP. B) rightward shift of the demand for labor curve and no change in potential GDP. C) rightward shift of the supply of labor curve and an increase in potential GDP. D) leftward shift of the supply of labor curve and a decrease in potential GDP.
Suppose a basket of goods that costs $400 in the United States costs only £200 in Britain and the current exchange rate is $1/pound. According to the purchasing power parity theory, the equilibrium exchange rate should be higher than $1/pound. Why?
a. The basket could be purchased in Britain for £200 and sold in the United States for $400, and the $400 could be used to purchase £400 for a £200 profit. b. The basket could be purchased in Britain for £200 and sold in the United States for $200, and the $200 could be used to buy £200, for a £500 profit. c. The basket could be purchased in the United States for $400 and sold in Britain for £400, and the £400 could be used to buy $1,400, for a £1,000 profit. d. The basket could be purchased in the United States for $200 and sold in Britain for £400, and the £400 could be used to buy $800, for a $400 profit. e. The basket could be purchased in the United States for $200 and sold in Britain for £400, and the £400 could be used to buy $900, for a £500 profit.