30.03.2023 - 12:22

QUESTION 3 Can accounting profit be positive while economic profits are negative? a. No. The two concepts are identical. b. Yes, if total revenue covers opportunity costs but not explicit costs.

Question:

QUESTION 3 Can accounting profit be positive while economic profits are negative?

a. No. The two concepts are identical.

b. Yes, if total revenue covers opportunity costs but not explicit costs.

c. Yes, if total revenue covers explicit costs but not opportunity costs.

d. No. Economic profits must always be larger than accounting profits.

Answers (1)
  • Nettie
    April 4, 2023 в 07:19
    The correct answer is (c), Yes, if total revenue covers explicit costs but not opportunity costs. Accounting profit only considers explicit costs such as rent, wages, utilities, and materials used to produce a product. Economic profit takes into account both explicit and implicit costs, including opportunity costs such as foregone alternative uses of resources. Therefore, it is possible for a company to have a positive accounting profit while still incurring negative economic profit if they are not accounting for opportunity costs. For example, a company may choose to produce a product that generates a profit but may have foregone a higher profit alternative. This is an opportunity cost that is not reflected in accounting profit but would be taken into account when calculating economic profit.
Do you know the answer?
Not sure about the answer?
Find the right answer to the question QUESTION 3 Can accounting profit be positive while economic profits are negative? a. No. The two concepts are identical. b. Yes, if total revenue covers opportunity costs but not explicit costs. by subject Business, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.
Search for other answers
New questions in the category: Business
Authorization
*
*

Password generation