Asked by
Divyesh Mohankumar
on Dec 11, 2024Verified
Suppose a professor gives up her teaching job to devote her time to writing textbooks. If salaries of professors rise,
A) her accounting profit will rise.
B) her accounting profit will fall.
C) her explicit costs will rise.
D) her economic profit from textbooks will fall.
E) her economic profit from textbooks will rise.
Economic Profit
The gap between all earnings and total expenditures, factoring in both overt and hidden costs.
Accounting Profit
The total revenue of a business minus the explicit costs associated with that business, as calculated for financial accounting and reporting purposes.
Explicit Costs
Direct, out-of-pocket payments made by businesses for resources and services.
- Understand the concept of economic profit and normal profit and how they differ from accounting profit.
Verified Answer
AR
Learning Objectives
- Understand the concept of economic profit and normal profit and how they differ from accounting profit.