economic profits and losses

How do you feel about business profits and losses? C. have no influence on the composition of domestic output. C. have no influence on the composition of domestic output. And if profits are bad, are losses good? 3. The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a … C) contribute to a more equal distribution of income. From society’s point of view the economic function of profits and losses is to: A) promote the equal distribution of real assets and wealth. Economic profits and losses: A. are both considered by economists to be a part of production costs. Accounting Profit: How to Calculate. Unfortunately, they lack an understanding of the formation and function of profits and losses in a free market economy. The answer depends on firm’s profit margin (or average profit), which is the relationship between price and average total cost. A profit and loss report is based on the calculation of profit (loss). – If it covers ALL of its costs • Firms that earn normal profit recover only their opportunity cost • Firms that earn positive economic profit recover more than their opportunity cost • Markets in which firms are earning economic Are profits bad? Most people have strong feelings about these questions. B. are essential to the reallocation of resources from less desired to more desired goods. 36. Does maximizing profit (producing where MR = MC) imply an actual economic profit? Economic profits and losses: A. are both considered by economists to be a part of production costs. Are essential to the reallocation of resources from less desired to more desired good B. Equalize the distribution of income in the long run C. Are both considered by economist to be a part of production costs D. Have no influence on the composition of domestic output Why? Economic profits and losses: A. D. equalize the distribution of income in the long run. Many economic issues concern profit and loss. D. equalize the distribution of income in the long run. B. are essential to the reallocation of resources from less desired to more desired goods. Economists like to concentrate on economic profits and losses rather than accounting profits or losses because the economic profits and losses … D) reallocate resources from less desired to more desired uses. Profits and Losses with the Average Cost Curve. Recall from previous lectures that firms use their average cost (AC) to determine profitability. He actually sustains an economic loss of $9,000. B) achieve full employment and price level stability. A monopolist calculates its profit or loss by using its average cost (AC) curve to determine its production costs and then subtracting that number from total revenue (TR). Chapter 7 – Opportunity Cost, Economic Profit and Losses, and the Miracle of Markets Business success has a clear and simple measure — the bottom line, or the profits that remain once you subtract all costs from your revenues. When you know this fact, his decision to switch careers doesn’t seem like such a good idea. The reliability of the financial results and analysis of economic activity depend on the accuracy of its calculation. Accounting profit is one of the critical indicators. Why? Average cost in this example is average total cost (ATC). Responses to Profits and Losses • Will the firm remain in business in the long run? Essential to the reallocation of resources from less desired to more desired goods MR! To determine profitability d. equalize the distribution of income in the long run c. have no influence on the of... Ac ) to determine profitability a good idea less desired to more desired goods total cost ( ATC.! 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