An Economist's View of Cost and Profit 7.1-1-Jenna Bryant Flashcards Preview

Econ 2106 Exam 2 > An Economist's View of Cost and Profit 7.1-1-Jenna Bryant > Flashcards

Flashcards in An Economist's View of Cost and Profit 7.1-1-Jenna Bryant Deck (12)
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1
Q

What type of profit uses only explicit costs?

A

Accounting Profit

2
Q

What type of profit calculates opportunity costs?

A

Economic Profit

3
Q

What are sunk costs?

A

Unrecoverable costs that a firm expends on a project

4
Q

Should sunk costs effect current decisions?

A

No, sunk costs should never effect current decisions

5
Q

What is the formula for profit?

A

TR-TC=profit, totatl revenue minus total costs equals profit

6
Q

What is an explicit cost?

A

A cost that a firm must write checks for

7
Q

How is accounting profit calculated?

A

The firm finds its total revenue and subtracts its explicit costs

8
Q

Which one is always less: accounting or economic profit?

A

Economic Profit

9
Q

How is economic profit calculated?

A

All profit greater than the opportunity costs and explicit costs

10
Q

What is another name for economic profit?

A

Rent

11
Q

If benefits are greater than the required additional costs to finish it, then?

A

Finish it

12
Q

If benefits are less than the required additional costs to finish it, then?

A

Terminate the project