Answer:
a. Economic profit is the excess of revenue over both opportunity (implicit) and explicit costs. Explicit costs are the cost of all inputs used.
b. The difference between economic profit and accounting profit is that in calculating economic profit, both the explicit costs and the implicit or opportunity costs are deducted from the revenue. Whereas, in computing the accounting profit, only the explicit costs are deducted from the revenue.
c. Economists measure economic profit rather than accounting profit because economists believe that the real cost of an output includes the economic or opportunity cost (potential benefits lost as a result of the course of action chosen).
Explanation:
Opportunity cost is the implicit cost incurred, which is equal to the potential benefits lost by an individual or a business, when an alternative is chosen instead of the other alternative. It is an important concept in the computation of economic profit. The concept ensures that both implicit and explicit costs are considered when determining the profits generated by a business.
Answer:
The initial expenditure of the company on salary is Rs. 72.000
Explanation:
First we need to express the employees ratio in letter
3A=B
2C=D
A and C being the amount of employees
B the salary before, D the salary after
They say the salary after is the slary before minus Rs. 12.000
we can express this as D=B-12.000
We know to that the salary of each employee increased 4 to 5
Then C=(5/4)A or A=(4/5)C
We can have the following equation
2((5/4)A)=B-12.000
A=(2/5)(B-12.000)
we use this in the first expression
3(2/5)(B-12.000)=B
1,2B-14400=B
0,2B=14400
B=72.000
Answer: Economic choices result in trade-offs.
Explanation:
The chart simply purports to show that when making economic decisions, you will have to accept trade-offs because resources are not infinite.
For instance, in order to expand, you will need to take on more financial risk. In that same vein, in order to serve more people, you will have to divide time between two stalls and might end up closing a stall.
Trade-offs simply have to be made.
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