[jgmart04]

When implicit costs are greater than zero and economic profits in an industry equal zero:

A. resources will be unproductive if they remain in the industry.

B. there will be no production in the short run.

C. resources will move to other industries

D. accounting profits will be greater than zero.

Can anyone help explain this a little more to me. The explanation in the MCQ was kind of confusing.

Thanks!

[Anonymous]

I don't remember this at all, so have no clue and will be unable to help…but…if you can post which answer is right, that usually is helpful for people to explain the concept, since it helps people confirm they're on the right track before explaining. (I'm always hesitant to post an explanation unless I know I'm right. 😐 )

[mckan514w]

OMG something from BEC I actually understand 🙂 Your economic profit includes both implicit and explicit cost- (such as opportunity cost). Accounting profits only include your explicit cost. So if you have an economic profit with implicit cost greater than 0 and your economic profits equal zero you know that your accounting profits will be higher because they will not include those implicit cost. Just put numbers to it.
Revenues =5
Expenses=4
Opportunity cost =1

Economic Profit =5-4-1=0
Accounting Profit=5-4=1

And they ask me why I drink

BEC 71, 82
AUD 75
REG 75
FAR 61, 69, 83

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[jgmart04]

That's perfect. Very simplistic explanation. Thanks!

@Lilla- I don't like including the answers. I find that people answer my questions in the same manner the answer is written, which doesn't help much.

[Anonymous]

I didn't mean to include the explanation (cause then, yes, they just regurgitate it), but just to say “answer is C – why?” or something like that (I didn't re-read the post right now, so can't remember which letter was the right answer 🙂 ).

[Author]

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