Ryan quit a job with a daily salary and opened a business. On a daily basis, the total revenue of the business is $200, and the explicit costs of the business are $120. If Ryan has zero economic profits, what must be the value of Ryans implicit costs?

PROFIT

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Ryan quit a job with a daily salary and opened a business. On a daily basis, the total revenue of the business is $200, and the explicit costs of the business are $120. If Ryan has zero economic profits, what must be the value of Ryan’s implicit costs?

A	$40
B	$60
C	$80
D	$0

Explanation:

Detailed explanation-1: -Which of the following statements regarding accounting profits, opportunity costs, and economic profits is true? If accounting profits are less than opportunity costs, there will be economic losses.

Detailed explanation-2: -When a firm experiences zero-profit equilibrium, the firm’s revenue must be sufficient to cover all opportunity costs. The marginal firm in a competitive market will earn zero economic profits in the long run. A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run.

Detailed explanation-3: -A firm is said to be enjoying economies of scale when its long run average costs (LRAC) decline with increasing production.

Detailed explanation-4: -Which of the following best explains why a firm’s short-run marginal cost curve shifts down when it purchases new, more efficient equipment and experiences an increase in its total cost? The equipment purchase is a fixed cost, and the new equipment will cause a reduction in the cost of producing each additional unit.

There is 1 question to complete.

ECONOMICS (CBSE/UGC NET)

ECONOMICS

PROFIT