Scenario 13-6
A certain firm produces and sells staplers.Last year,it produced 7,000 staplers and sold each stapler for $6.In producing the 7,000 staplers,it incurred variable costs of $28,000 and a total cost of $45,000.
-Refer to Scenario 13-6.Suppose the owner of the business had an offer to work for another firm that raises his opportunity cost by $25,000.The firm's accounting profit for the year was

Question

Quizplus · Accepted Answer

The firm's accounting profit can be calculated as follows:

Total revenue = 7,000 staplers x $6/stapler = $42,000
Total variable cost = $28,000
Total cost = $45,000
Fixed cost = Total cost - Total variable cost = $45,000 - $28,000 = $17,000

Accounting profit = Total revenue - Total cost = $42,000 - $45,000 = -$3,000

However, since the owner has an opportunity cost of $25,000, the economic profit would be even lower:

Economic profit = Accounting profit - Opportunity cost
Economic profit = -$3,000 - $25,000 = -$28,000

Therefore, the best choice is C, as it reflects the accounting profit of the firm.

Scenario 13-6 A Certain Firm Produces and Sells Staplers.Last Year,it Produced 7,000