d. generally invisible. e. an out-of-pocket expense 1924 ESTION 33 as a contract

Question

d. generally invisible. e. an out-of-pocket expense 1924 ESTION 33 as a contractor for a year, carmed revenues of $120,000 andinecurre n cexplici os orf 70,00 I he could havemed $000 woking f a computer company, his economic profit as a contractor would be a.-$50,000 b.-$30,000 C.-$10,000 O d.$40,000 e. $30,000 QUESTION 34 Figure 7-8 shows a firm in a perfedly competitive market. Which of the following is most likely to happen in the given marker? Figure 7-8 ATC P- MR a. New firms would be likely to enter, decreasing the market price b. Existing firms would be likely to exit, decreasing the market price c. Existing firms would be likely to exit, increasing the market price. d. Firms would neither enter nor exit, and the market price would remain unchanged. e. New firms would be likely to enter, inercasing the market price. o

Explanation / Answer

Ans:

33) Option B

Economic profit = -$30,000

Explanation

Economic profit = Revenue - Explicit cost - Implicit cost

                         = $120,000 - $70,000 - $80,000

                         = -$30,000

  Hence the economic profit as a contractor would be -$30,000

                       

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