ECONOMICS

Detailed explanation-1: -If total revenue were less than total variable cost, the firm’s economic loss would exceed total fixed cost. So the firm would shut down temporarily. Total fixed cost is the largest economic loss that the firm will incur. The firm’s economic loss equals total fixed cost when price equals average variable cost.

Detailed explanation-2: -Below the Line refers to items in a profit and loss statement that are income or expense items that are not normally incurred in a company’s day-to-day operations. It includes exceptional and extraordinary items that relate to another accounting period or do not apply to the current accounting period.

Detailed explanation-3: -Gross profits is the difference between total revenue and total cost.

Detailed explanation-4: -Gross profit and gross profit margin Gross profit is the money your business holds after deducting the cost of making and selling your product. When your sales revenue (the total amount you bring in from sales) exceeds your direct expenses (cost of goods sold), your business has made a gross profit.