Answer:
B. decisions made by individual households and firms.
Explanation:
Economics is the study of choice to satisfy unlimited wants from limited resources, having alternative uses.
'Micro' word gets origination from greek language, meaning 'small'
Micro Economics is the study of 'individual' economic participants - individual households' & individual firms' choice decisions
Eg : Price of a good, Utility maximising consumption of consumer, profit maximising output of a producer/ seller.
Answer: Work out at the gym
Explanation:
Opportunity cost of a decision is the next best alternative that would have been picked if the current decision wasn't made. For example suppose you would either eat chips or meat and you chose to eat meat. The chips are an opportunity cost of the meat.
In the same vein, the opportunity cost of going to library would be your next best (preferred) activity which in this case would be to work out at the gym.
In order words when you go to the library, you are giving up a chance to go to the gym.
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.
