The following figure shows the cost and revenue structures of a firm. MC represents the marginal cost curve, AC represents the average cost curve, AR represents the average revenue curve, and MR represents the marginal revenue curve. P* is the equilibrium price and Q* is the equilibrium output.Figure 9.5

-A firm's accounting profit does not include its:
A)explicit costs.
B)sunk costs.
C)fixed costs.
D)opportunity costs.
E)variable costs.

Question

The following figure shows the cost and revenue structures of a firm. MC represents the marginal cost curve, AC represents the average cost curve, AR represents the average revenue curve, and MR represents the marginal revenue curve. P* is the equilibrium price and Q* is the equilibrium output.Figure 9.5
 
-A firm's accounting profit does not include its:
A)explicit costs. 
B)sunk costs. 
C)fixed costs. 
D)opportunity costs. 
E)variable costs.

Quizplus · Accepted Answer

Accounting profit includes explicit costs such as fixed and variable costs but does not account for opportunity costs, which are considered in economic profit. Sunk costs are also not excluded from accounting profit calculations.

The Following Figure Shows the Cost and Revenue Structures of a Firm