An Economist's View of Cost and Profit 7.1-1-Jenna Bryant Flashcards Preview

Econ 2106 Exam 2 > An Economist's View of Cost and Profit 7.1-1-Jenna Bryant > Flashcards

Flashcards in An Economist's View of Cost and Profit 7.1-1-Jenna Bryant Deck (12):
1

What type of profit uses only explicit costs?

Accounting Profit

2

What type of profit calculates opportunity costs?

Economic Profit

3

What are sunk costs?

Unrecoverable costs that a firm expends on a project

4

Should sunk costs effect current decisions?

No, sunk costs should never effect current decisions

5

What is the formula for profit?

TR-TC=profit, totatl revenue minus total costs equals profit

6

What is an explicit cost?

A cost that a firm must write checks for

7

How is accounting profit calculated?

The firm finds its total revenue and subtracts its explicit costs

8

Which one is always less: accounting or economic profit?

Economic Profit

9

How is economic profit calculated?

All profit greater than the opportunity costs and explicit costs

10

What is another name for economic profit?

Rent

11

If benefits are greater than the required additional costs to finish it, then?

Finish it

12

If benefits are less than the required additional costs to finish it, then?

Terminate the project