NEW
Font size
WorksheetsTopic 1 - Quiz 1 - 2129
Total questions: 5
Worksheet time: 4mins
Consider a two-period firm where π1 is profit in year 1, and π2 is profit in year 2, and r is the interest rate. The total profit over the two periods from the firm can be represented by:
π=π1+π2
π=π1+1+rπ2
π=π1+π2(1+r)
π=1+rπ1+π2
Total economic cost:
is the sum of all explicit opportunity costs the firm’s owners incur by employing resources that they own.
is the sum of all implicit opportunity costs the firm’s owners incur by employing resources that must be purchased in resource markets.
is subtracted from total revenue to compute accounting profit.
represents the opportunity cost of all resources used by the firm to produce goods and services.
Consider a firm that employs some resources that are owned by the firm. When economic profit is zero, accounting profit is
positive and equal to the opportunity cost of all the resources used in production.
equal to the implicit costs of using owner-supplied resources.
negative.
also zero.
Consumer–consumer rivalry arises because of
human nature.
the limited number of suppliers.
the scarcity of goods available.
the dependence of producers upon technology.
Consumer–consumer rivalry
increases the negotiating power of consumers in the marketplace.
reduces the negotiating power of producers in the marketplace.
reduces the negotiating power of consumers in the marketplace.
increases the likelihood of government intervention in the marketplace.
