Reading #15 - Econ - The Firm Flashcards

1
Q

formula for accounting profit

A

TR (tot. revenue) - total accounting (explicit) costs

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2
Q

Formula for economic profit

A

accounting profit - implicit opp costs or TRev - total economic costs or TRev - explicit - implicit

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3
Q

Define normal profit

A

account profit for which economic profit = 0

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4
Q

formula for normal profit

A

accounting profit - economic profit

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5
Q

define economic rent to a factor of production

A

difference btween earnings and opp. cost.

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6
Q

when is there no economic rent?

A

when supply curve is pefectly elastic

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7
Q

when is there the greatest economic rent?

A

perfectly inelastic supply curve

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8
Q

what is implicit cost

A

non tangible cash flows (i.e opp cost of firm’s equity)

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9
Q

what is explicit cost

A

measureable cash flows for operating expenses

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