rate with e Cutput decreases at a decreasing r with additional units of impot Ou

Question

rate with e Cutput decreases at a decreasing r with additional units of impot Ouput decreases atn incressing rate 31 (ID: 131.13.3-MC-M ueetion 1 Chapter mazpeoBr, Section 133, Problem 131 (IDI 131.13.3 19. Chapter mazpeosr, Section 133, Problem 131 0131.133-MC -MANKOS) Scenario 13-19 Doreen's Dairy produces and sells Swiss cheese. for $6. Last year, it produced 7,000 pounds and sold each pound in producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000. Refer to Scenario 13-19. Suppose the owner of the business had an offer to work for another firm for $25,000. The firm's accounting profit for the year was a.-$26,000. b. -$23,000. c. $2,000 d. $14,000. Question 20: Chapter ma2pe08r, Section 131, Problem 050 (ID: 050.13.1- MC- MANKO ses.aplia.com/af/servlet/print

Explanation / Answer

Question 19). Answer :- Option c). $ 2,000.

Explanation :- Accounting profit = Total revenue - Total explicit cost.

= (7000 * 6) - 40000

= 42000 - 40000

= $ 2,000. (Option c).

Note :- The opportunity cost of $ 25000 given in the question would be subtracted from the total revenue while arriving at the economic profit. Accordingly, while calculating the accounting profit, Opportunity cost of $ 25,000 will not considered because accounting profit is the difference between total revenue and total explicit costs. Implicit costs (Opportunity costs) do not form the part of total cost while calculating the accounting profit.

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