Profit

income received from an economic action, minus the costs of taking the action

• marginal benefit

• marginal cost

• marginal revenue

• profit

What is a profit?

• a record of money earned and spent

• a very powerful force that can destroy anything in its way

• the amount of money left after all the costs of running a business have been subtracted from all the money earned

What a business has left after all the bills have been paid?

• supplies

• taxes

• profit

• debt

Earning an economic profit of zero is

• a sign that the firm should shut down

• less desirable to a firm than earning an accounting profit of zero

• acceptable during a recession but otherwise not

• equivalent to earning an accounting profit of zero if implicit costs exist

• acceptable because the firm could make no better alternative use of its resources

Once a business has paid all of its costs, the money left over is ___

• revenue

• profit

• supply

• tax

How can a company know it made a profit?

• It sold all its products.

• It earned the most revenue during sales.

• It earned more money in revenue than it spent on expenses.

• It didn't sell too many shares of stock to the venture capitalist.

• All of the above

All of the statements regarding profit below are correct, except for?

• Profit is the same as cash in the bank

• Profit is the return for the owner from their investment in the business

• Profit is calculated as revenue minus expenses

• Profit should be compared to other investment options, such as interest rates and shares

Calculate profit given the Statement of Profit or Loss shown.

• Profit $31,700

• Profit $1,700

• Loss ($31,700)

• Loss ($1,700)

Calculate the total revenues given the Statement of Profit or Loss shown.

• $14,800

• $27,600

• $70,000

• Cannot be determined given the information

A star athlete receives an offer of $100 million from a major shoe company for a contract to exclusively endorse its products and also receives the same offer from a competing company.

If he accepts the contract offer from the first company, an economist would say that based on this information, the contract earns him

• an economic profit of $100 million because he incurred no costs.

• an economic profit of $100 million because his explicit costs are zero.

• a normal profit because his opportunity cost is equal to the payment from the contract he accepts.

• an economic loss because he is unable to accept both contracts.

• an accounting loss because he is unable to accept both contracts.