ECON 101 2Midtermreview

Short run decisions are easily reversed the long run

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Unformatted text preview: he firm pays the correct amount of tax and to show it investors how their funds are being used. Profit equals total revenue minus total cost. Accountants use Internal Revenue Service rules based on standards established by the Financial Accounting Standards Board to calculate a firm’s depreciation cost. Economic Profit Economists measure a firm’s profit to enable them to predict the firm’s decisions, and the goal of these decisions in to maximize economic profit. Economic profit is equal to total revenue minus total cost, with total cost measured as the opportunity cost of production A Firm’s Opportunity Cost of Production A firm’s opportunity cost of production is the value of the best alternative use of the resources that a firm uses in production. A fi...
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