ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A firm produces 400 toys and sells each toy for $10. If the explicit cost of producing the toys is $500 and the implicit cost is $1, 000, the firm’s economic profit is
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$1, 000
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$500
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$0
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$2, 500
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Explanation:
Detailed explanation-1: -It means total revenue minus explicit costs-the difference between dollars brought in and dollars paid out.
Detailed explanation-2: -Answer and Explanation: The correct answer is option c. 800 units.
Detailed explanation-3: -If economic cost is $96, 000 and total revenue is $120, 000, what is the economic profit? $24, 000; Economic profit equals total revenue minus economic cost.
Detailed explanation-4: -diseconomies of scale. FEEDBACK: Diseconomies of scale occurs when the cost of inputs increase by a greater percentage than output. In this question the costs of inputs increased by 40% but output by only 25%. Therefore, the firm experienced diseconomies of scale.
There is 1 question to complete.