Accounting profits are typically
A) greater than economic profits because accounting profits do not include explicit costs.
B) greater than economic profits because accounting profits do not include implicit costs.
C) smaller than economic profits because accounting profits do not include explicit costs.
D) equal to economic profits in the long run.
B
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The impact of a strike is limited to the ability of the union to
A) prevent replacement workers from continuing their work. B) lower its wage demands of non-union members. C) control the pension fund. D) none of the above.
Suppose that government regulators required a natural monopoly to charge a price equal to the marginal cost of the last unit produced. Which of the following would then be true?
a. The natural monopoly would earn zero economic profits but consumers would benefit from the low regulated price. The low price would sustain long-run production of the firm. b. The natural monopoly would be allocatively efficient but would suffer economic losses. It would be unable to sustain itself in the long run. c. The natural monopoly would be allocatively efficient and would earn positive economic profits. Consumer surplus would increase significantly. d. The natural monopoly would be allocatively inefficient but earn positive economic profits. Consumer surplus would reduce significantly.