Explore BrainMass
Share

Explore BrainMass

    price elasticity of demand of accounting profits

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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

    © BrainMass Inc. brainmass.com October 9, 2019, 11:18 pm ad1c9bdddf
    https://brainmass.com/economics/elasticity/price-elasticity-demand-accounting-profits-251861

    Attachments

    Solution Preview

    Dear Student,

    Thank you for using BM.
    Below are my answers.

    ANSWERS

    1. B
    [(22-18)/18]/[(8-10)/10] = -0.89
    Absolute value ...

    Solution Summary

    The price elasticity of demand is featured.

    $2.19