Economic Profit

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

• marginal benefit

• marginal cost

• marginal revenue

• profit

Driving force that encourages people and organizations to improve their material well-being.

• FOMO

• Market Economy

• Profit Motive

• Voluntary Exchange

The money left after production costs are subtracted from revenue is called

• free rider

• profit

• subsidy

• scarcity

In the marketplace, producers are looking to

• buy goods for personal use

• earn a profit

• find incentives

• find the latest fad

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

Economic Profit is defined as the difference between total revenue and total costs, including both explicit and implicit costs. Which of the following best describes this concept?

• Accounting Profit

• Gross Profit

• Net Profit

• Economic Profit

Which of the following is a key component in calculating economic profit?

• Only explicit costs

• Only implicit costs

• Both explicit and implicit costs

• Neither explicit nor implicit costs

Economic profit is often considered a better measure of profitability than accounting profit because it includes which of the following?

• Only tangible assets

• Only cash flows

• Opportunity costs

• Only fixed costs

If a company has zero economic profit, what does this indicate about its resources?

• Resources are underutilized

• Resources are overutilized

• Resources are used efficiently

• Resources are wasted

Which of the following scenarios would result in a positive economic profit?

• Total revenue equals total costs

• Total revenue is less than total costs

• Total revenue exceeds total costs

• Total revenue is zero