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# price elasticity of demand of accounting profits

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1). Use the attached diagram to answer the next question. Between the prices of \$10 and \$8, the price elasticity of demand is:
A) 0.5
B) 0.9
C) 1.11
D) 2.0

2). Suppose that a business incurred implicit costs of \$300,000 and explicit costs of \$1,300,000 over the past year. If the firm earned \$1,400,000 in revenue, its:
A) accounting profits were \$400,000 and its economic profits were \$100,000
B) accounting losses were \$200,000 and its economic profits were \$100,000
C) accounting profits were \$100,000 and its economic profits were zero
D) accounting profits were \$100,000 and its economic losses were \$200,000

3). The WXY Corporation has fixed costs of \$50. Its total variable costs (TVC) vary with output as shown in the attached table.

Refer to the table. The average total cost of 4 units of output is:
A) \$27.50
B) \$40.00
C) \$52.50
D) \$210.00

4). The attached diagram shows the short-run average total cost curves for five different plant sizes for a firm. The firm experiences economies of scale over the range of plant sizes:
A) 1 through 2 only
B) 1 through 3 only
C) 1 through 5
D) 3 through 5 only

5). Refer to the table attached. Suppose the firm's goal is maximum profits (or minimum losses.) If this firm's minimum average variable cost is \$23, the firm will produce:

A) 0 units
B) 2 units
C) 3 units
D) 4 units

6). Use the attached diagram to answer the next question.
Refer to the diagrams, which pertain to a purely competitive firm and the industry in which it operates. The firm will produce q units and incur an economic loss.

A) True
B) False

https://brainmass.com/economics/elasticity/price-elasticity-demand-accounting-profits-251861

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