Question

01Question(1 point) 1st attempt See Hint Total profits and losses are determined by ______________. Choose one: A. subtracting total cost from total revenue B. subtracting explicit costs from total revenue C. subtracting implicit costs from total revenue D. adding total cost to total revenue

Answer 1

The correct answer is option A.

Step-by-step explanation:

Total profits and losses can be determined by deducting total costs from total revenue.

In the short run, some costs are variable while others are fixed. In the short run, the profit and loss are calculated by deducting the total variable cost from total revenue.

While in the long run, all costs are variable. So total profits are calculated by deducting total costs from total revenue.

The explicit costs are the direct cost involved in the production process. The implicit cost is the opportunity cost of giving up the second-best alternative. The accounting profits or loss consider only the explicit cost. But in the calculation of economic profits, both explicit as well as the implicit cost is considered.