Accounting statements of profits are often over statements of economic profits because

Accounting statements of profits are often over statements of economic profits because

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Unformatted text preview: Accounting statements of profits are often over statements of economic profits because A) accounts don't include part of the payments to shareholders of a corporations as costs. Feedback: Shareholders could be investing in another company. The minimum amount you have to pay them to keep them investing (owning stock) in this company is a cost, and must be deducted from accounting profits in order to get economic profits. Points Earned: 0.0/1.0 Correct Answer(s): A 2. In the long-run A) all inputs are variable for the firm. Points Earned: 0.0/1.0 Correct Answer(s): A 3. The basic distinction between the short-run and the long-run in a perfectly competitive industry is that in the long-run firms D) are free to enter or exit. Correct Answer(s): D 4. Old Professor Liedholm quits his job at MSU, where let us assume he makes $500,000 per year(!), to open a self-owned consulting firm. He also hires one worker, who is paid $30,000 per year. There are no other expenses. One could then conclude that his B) explicit costs would be $30,000 and implicit costs would be $500,000. Correct Answer(s): B 5. Limited personal liability is an advantage of A) a sole proprietorship. B) a partnership. C) both a sole proprietorship and a partnership. D) corporations. E) none of the above. The production function describes C) the relationship between a firm's output and the amounts of inputs it uses. Correct Answer(s): C 2. The Law of Diminishing Returns means that C) the marginal product of an input will eventually decline as the amount of an input is increased. Correct Answer(s): C 3. Consider an apple farm that has the following data on production: When 10 workers are used, output is 80. When 11 workers are used, output is 88. When 12 workers are used, output is 93. Which of the following statements is true? A) The marginal product of the tenth worker is 8.0. B) The marginal product of the twelfth worker is 5. C) The marginal product of the eleventh worker is 8.0. D) The Law of Diminishing Returns is true for this production process for the input values shown. E) All of B), C), and D) are true, but A) is not true. Feedback: The marginal product of the 10th worker can't be found, because we don't know how much is produced by 9 workers. The marginal product of the 11th worker is 8 (88-80)/(11-10). The Law of Diminishing Returns means that the marginal product of an input declines as more of the input is used. Marginal cost is C) the increase in cost due to increasing production by one unit....
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Accounting statements of profits are often over statements of economic profits because

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