ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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TR = TC
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TR = TVC
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Economic Profit > 0
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MR > MC
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Detailed explanation-1: -TR – TC = 0 or TR = TC. This also means that AR or P equals AC if we divide quantity. i.e. TR TC Q Q = . When the firm’s total cost exceeds total revenue, i.e. TC > TR the firm incurs loss.
Detailed explanation-2: -Formula for normal profit Economic profit = total revenue-(explicit costs + opportunity costs) = 0A business determines whether it’s in a state of normal profit by using the economic profit formula. If the economic formula equals zero, the company has a normal profit.
Detailed explanation-3: -At the break-even point, TR=TC and profits are zero.
Detailed explanation-4: -When TR is greater than TC the firm earns an economic profit and when TC is greater than TR firm earns an economic loss.
Detailed explanation-5: -Normal profit occurs when the difference between a company’s total revenue and combined explicit and implicit costs are equal to zero.