Question

[27] When calculating profit accountants include:

A) explicit costs.

B) implicit costs.

C) explicit and implicit costs.

D) explicit, implicit, and external costs.

[28] The economic cost of production is equal to:

A) explicit costs plus excess profit.

B) explicit costs plus normal profit.

C) implicit costs plus excess profit.

D) implicit costs plus normal profit.

[29] Total revenue is the:

A) revenue from one unit of a good or service sold.

B) revenue from the total amount of a good or service sold.

C) change in revenue from selling an additional unit of a good or service.

D) difference between the revenue from selling a good or service and its cost of production.

[30] Marginal revenue is the:

A) revenue from selling one unit of a good or service.

B) revenue from the total amount of a good or service sold.

C) change in total revenue from selling one more unit of a good or service.

D) difference between the revenue from selling a good or service and its cost of production.

Answer 1

27. Answer- A)

Accountants are concerned about transactions which have occurred and therefore would record only explicit costs of the firm. Explicit costs are the costs for which the firm had to pay out of its pockets.

28. Answer- D)

To add economic cost of production we must include implicit cost and the normal profit. Implicit cost is the opportunity cost for the firm which is not directly incurred. Normal profit = Revenue- explicit expenses- implicit expenses

29. Answer- B)

Total revenue is defined as the total revenue generated from selling total amounts of goods and services. Therefore, the answer is option B.

30. Answer- C)

Marginal revenue is the additional revenue generated by selling an additional unit. It is calculated by the difference in the total revenue by producing an additional unit.