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1. regarding microeconomics, which of the following statement is correct?

A. ACcounting profit is greater than marketing costs

B. Accounting costs include opportunity costs

C. Accounting profit is different from economic profit

D. Economic profit is less than production costs

2. when a manufuctureing company raises prices for its products its a reflection of a/an

A. increase in producer price index (PP°.

B. decrease in consumer price index (CPI).

C. decrease in balance of payments (BOP).

D. increase in balance of trade (SOT).

3. A financial analyst at RMO Manufacturing Corporation has assembled the following d fiscal year. All data is in millions (M). Gross sales $12M Interest expenses $0.5M Returns and allowances $1M Taxes $0.1M Cost of goods sold $3M Cash dividends $0.4M Operating expenses $3M Conimon stock $1M
to for the last
What is the net income or loss for the RMO Manufacturing Corporation for the last fiscal year?

A. Net loss of $4M

B. Net income of $5111

C. Wel t income of $41‘.1

D. Nla t loss of $5M

Explanation / Answer

Question 1

With respect to microeconomics, accounting profit is considered as different from economic profit.

Accounting profit only takes into account explicit cost whereas economic profit takes into account explicit cost as well as the implicit cost (opportunity cost).

So, as per microeconomics, economic profit indicates long-run viability of the business.

A business that is earning accounting profit but is incurring economic loss will not be a viable business and it will shut down eventually.

So, regarding microeconomics, the correct statement is that accounting profit is different from the economic profit.

The correct answer is the option (C).

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