1. Zero economic profit means that
The firm breaks down |
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The firm makes just normal profits |
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The firm must close down |
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The firm must raise the price of the commodity |
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All of the above |
2. Normal Profit is:
The opportunity cost of capital committed in a certain line of business |
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The profit any firm makes in the market |
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The minimum capital return required in order to stay in a certain type of business |
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(a) and (c) |
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All of the above |
QUESTION 3
Whatâ s the meaning of negative economic profit
The firm is losing money |
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Economic costs exceed corporate revenues |
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Economic resources are allocated inefficiently |
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Both A and B |
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None of the above |
Economic profit is defined as the difference between the total revenue and the total cost of the firm.
Economic profit = Total Revenue - Total Cost
A firm that earns zero economic profit is said to be earning normal profits. Firms earning more than zero economic profits are said to be earning positive economic profits. Similarly, the firm earning negative economic profits is said to be earning negative economic profits.
1. Zero economic profits mean that the firm makes just normal profits.
2. Normal profits are nothing but the profit any firm makes in the market.
3. Negative economic profit is the case where economic costs are greater than the corporate revenues.
1. Zero economic profit means that The firm breaks down The firm makes just normal profits...
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Read below and answer, Why does a business that has profit of
$30,000 per year need a bank loan?
Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank-a local one- branch bank-to $250,000 in 2006. The maximum loan that Metropolitan would make...
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Please read the facts of the case and prepare answers for the
following questions :
1 – What is the relevance of the $2,000 monthly payment
to Dave Verden on the analysis of Jones’ financing needs?
2 – What metrics could you use to compare the historical financial
results for Jones with the projected financial results under the
four defined scenarios?
3 – Other than financing needs, what other issues should Jones
address as he considers the different growth
scenarios?...
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