Suppose a professor gives up her teaching job to devote her time to writing textbooks.Soon after,salaries for professors rise.As a result,_____
A)her accounting profit will rise.
B)her accounting profit will fall.
C)her explicit costs will rise.
D)her economic profit from textbooks will fall.
E)her economic profit from textbooks will rise.

Question

Quizplus · Accepted Answer

The increase in salaries for professors may lead to more competition among textbook writers, which may lead to lower sales and therefore lower economic profit for the professor who gave up her teaching job to write textbooks. However, her accounting profit may still rise if she is selling enough textbooks to cover her explicit costs.

Suppose a Professor Gives Up Her Teaching Job to Devote