Question

For each set of solutions, provide the solutions for the given questions.

a) For the firm earning an accounting profit of $20, determine the level of total accounting costs incurred by the firm.
b) For the firm earning an economic profit of -$20, determine the level of total opportunity costs incurred by the firm.
c) For each question, provide the correct numerical solution.

Answer 1

For a firm earning a $20 accounting profit, we cannot determine the level of total accounting costs or total opportunity costs without explicit costs.

Step-by-step explanation:

a) For the firm earning an accounting profit of $20, determine the level of total accounting costs incurred by the firm:

The accounting profit is calculated by subtracting the explicit costs from total revenues. In this case, the accounting profit is $20. To calculate the total accounting costs, we need to add up the explicit costs. However, explicit costs are not given, so we cannot determine the level of total accounting costs.

b) For the firm earning an economic profit of -$20, determine the level of total opportunity costs incurred by the firm:

Economic profit is calculated by subtracting both explicit and implicit costs from total revenues. In this case, the economic profit is -$20. To calculate the total opportunity costs, we need to subtract the explicit costs from the economic profit. However, explicit costs are not given, so we cannot determine the level of total opportunity costs.

c) For each question, provide the correct numerical solution:

Unfortunately, without the values of explicit costs, we cannot provide the numerical solutions for the total accounting costs and total opportunity costs.