Can accounting profit be positive while economic profits are negative?
A. No. The two concepts are identical.
B. No. Economic profits must always be larger than accounting profits.
C. Yes, if total revenue covers opportunity costs but not explicit costs.
D. Yes, if total revenue covers explicit costs but not opportunity costs.
Answer: D
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Which of the following is an example of an activity that creates an external cost?
i. a smoker emitting second-hand smoke ii. sulfur emitting from a smoke stack iii. throwing garbage on the roadside A) i only B) i and ii C) iii only D) ii and iii E) i, ii, and iii
If protective import-restricting tariffs are imposed by a country, in the majority of cases that nation's producers end up
A) receiving a higher price for the good than they otherwise would. B) receiving a lower price for the good than they otherwise would. C) producing less of the good than they otherwise would. D) receiving a lower profit for the domestic good than they otherwise would.