Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 7, Problem 1SCQ

A firm had sales revenue of $ 1 million last year. It spent $ 6 00 , 000 on labor, $ 15 0 , 000 on capital and $ 2 00 , 000 on materials. What was the firm’s accounting profit?

Expert Solution & Answer
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To determine

The Accounting profit of the firm.

Answer to Problem 1SCQ

The Accounting profit of the firm is $50,000.

Explanation of Solution

Given information:

Sales revenue: $1 Million

Costs:

Labor: $600,000

Capital: $150,000

Materials: $200,000

Calculation:

Accounting profit = total revenues minus explicit costs

= $1,000,000 − ($600,000 + $150,000 + $200,000)

=$50,000.

So, The Accounting profit of the firm is $50,000.

Economics Concept Introduction

Introduction:

Accounting Profit is defined as the amount which is left after deducting all the costs from the revenue earned by the company that is Total Revenue − Explicit Costs.

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A firm had sales revenue of $1 million last year. It spent $600000 on labor, $150000 on capital and$200000 on materials. What was the firm’s accounting profit?
A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 onmaterials. What was the firm’s accounting profit?
Danielle decides to withdraw her savings of $70,000 and invest in starting her own clothing business. She normally earns $3,000 in interest from her savings. If Danielle earned an accounting profit of $60,000 last year, what was her economic profit?

Chapter 7 Solutions

Principles of Economics 2e

Ch. 7 - What is die difference between accounting and...Ch. 7 - What is a production function?Ch. 7 - What is the difference between a fixed input and a...Ch. 7 - How do we calculate marginal product?Ch. 7 - What shapes would you generally expect a total...Ch. 7 - What are the factor payments for land, labor, and...Ch. 7 - What is the difference between fixed costs and...Ch. 7 - How do we calculate each of the following:...Ch. 7 - What shapes would you generally expect each of the...Ch. 7 - Are there fixed costs in the lung-run? Explain...Ch. 7 - Are fixed costs also sunk costs? Explain.Ch. 7 - What are diminishing marginal returns as they...Ch. 7 - Which costs are measured on per-unit basis: fixed...Ch. 7 - What is a production technology?Ch. 7 - In choosing a production technology, how will...Ch. 7 - What is a long-run average cost curve?Ch. 7 - What is the difference between economies of scale,...Ch. 7 - What shape of a long-run average cost curve...Ch. 7 - Why will firms in most markets be located at or...Ch. 7 - Small Mom and Pop firms, like inner city grocery...Ch. 7 - A common name for fixed cost is overhead. If you...Ch. 7 - How does fixed cost affect marginal cost? Why is...Ch. 7 - Average cost curves (except for avenge fixed cost)...Ch. 7 - What is the relationship between marginal product...Ch. 7 - It is clear that businesses operate in the short...Ch. 7 - Retune to Table 7.2. In the top half of the table,...Ch. 7 - How would an improvement in technology, like the...Ch. 7 - Do you think that the taxicab industry in large...Ch. 7 - A firm is considering an investment that will earn...Ch. 7 - Return to Figure 7.7. What is the marginal gain in...Ch. 7 - Compute the average total cost, average variable...Ch. 7 - A small company that shovels sidewalks and...
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