Ch. 13 Sapling

What is the primary difference between accounting profits and economic profits? The primary difference is that - accounting profits only occur when money is made; economic profits can occur when money is lost. - accounting profits ignore implicit costs; economic profits consider them. - economic profits focus on money; accounting profits focus on all types of capital. - economic profits require the exchange of money; accounting profits do not.

- accounting profits ignore implicit costs; economic profits consider them.

Marginal cost is the - change in total cost for a one unit change in output. - fixed cost associated with each unit of output. - change in the price of a good for a one unit change in output. - average cost of producing each unit of output.

- change in total cost for a one unit change in output.

Russ owns a fried chicken stand at the local beach. In calculating how much he earns from his business, Russ notices a difference between his economic and accounting profits. Why would Russ' economic profits differ from his accounting profits? They could differ because - accounting profits do not consider the tax that Russ has to pay on his earnings. - he may have implicit costs associated with operating the chicken stand in addition to explicit costs. - consumer demand for fried chicken fluctuates throughout the year. - in some years he posts a profit and in other years he posts a loss.

- he may have implicit costs associated with operating the chicken stand in addition to explicit costs.

The long run is best defined as a time period - that is longer than one year. - during which consumer income changes. - during which at least one input cannot be changed. - that is long enough to change all factors of production.

- that is long enough to change all factors of production.

Complete the sentences to illustrate how economists and accountants view profit differently. Economic profit is - always zero. - typically lower than accounting profit. - typically higher than accounting profit. Economic costs and accounting costs differ because accountants include - only implicit costs. - only explicit costs. - both explicit and implicit costs. - neither explicit nor implicit costs. Economic costs and accounting costs differ because economists include - only explicit costs. - both explicit and implicit costs. - only implicit costs. - neither explicit nor implicit costs.

- typically higher than accounting profit. - only explicit costs. - both explicit and implicit costs.

One thing that distinguishes the short run from the long run is - opportunity costs. - whether any costs are fixed. - the presence of variable costs. - the number of months considered.

- whether any costs are fixed.