Examples of economic profit in the following topics:
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- Consequently, the firm earns $25,000 in economic profit.
- Economic profits may be positive, zero, or negative.
- In the short run, a firm can make an economic profit.
- An economic profit of zero is also known as a normal profit.
- Despite earning an economic profit of zero, the firm may still be earning a positive accounting profit.
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- In general, profit is the difference between costs and revenue, but there is a difference between accounting profit and economic profit.
- The biggest difference between accounting and economic profit is that economic profit reflects explicit and implicit costs, while accounting profit considers only explicit costs.
- Economic profit includes the opportunity costs associated with production and is therefore lower than accounting profit.
- Economic profit also accounts for a longer span of time than accounting profit.
- The biggest difference between economic and accounting profit is that economic profit takes implicit, or opportunity, costs into consideration.
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- A firm in a perfectly competitive market may generate a profit in the short-run, but in the long-run it will have economic profits of zero.
- As the price goes down, economic profits will decrease until they become zero.
- As the price goes up, economic profits will increase until they become zero.
- In the long-run, economic profit cannot be sustained.
- In the long-run, the firm will make zero economic profit.
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- Monopolies can influence a good's price by changing output levels, which allows them to make an economic profit.
- Monopolies, unlike perfectly competitive firms, are able to influence the price of a good and are able to make a positive economic profit.
- Q=3 must be the profit-maximizing output for the monopoly.
- Because a monopoly's marginal revenue is always below the demand curve, the price will always be above the marginal cost at equilibrium, providing the firm with an economic profit .
- This causes economic inefficiency.
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- In economic theory, the profit-maximizing amount of output in occurs when the marginal cost of producing another unit equals the marginal revenue received from selling that unit .
- Economic Profit: The firm's average total cost is less than the price of each additional product at the profit-maximizing output.
- The economic profit is equal to the quantity output multiplied by the difference between the average total cost and the price.
- Normal Profit: The average total cost equals the price at the profit-maximizing output.
- In this case, the economic profit equals zero.
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- In economics, a cost curve is a graph that shows the costs of production as a function of total quantity produced.
- Profit maximization is the short run or long run process that a firm uses to determine the price and output level that returns the greatest profit when producing a good or service.
- When a table of costs and revenues is available, a firm can plot the data onto a profit curve.
- The profit maximizing output is the one at which the profit reaches its maximum .
- Profit maximization is directly impacts the supply and demand of a product.
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- A cartel is a formal collusive arrangement among firms with the goal of increasing profits.
- A cartel is an agreement among competing firms to collude in order to attain higher profits.
- Because crude oil from the Middle East was known to have few substitutes, OPEC member's profits skyrocketed.
- Around the same time OPEC members also started cheating to try to increase individual profits.
- In the 1970s, OPEC members successfully colluded to reduce the global production of oil, leading to higher profits for member countries.
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- Firms in an oligopoly can increase their profits through collusion, but collusive arrangements are inherently unstable.
- When there are few firms in the market, they may collude to set a price or output level for the market in order to maximize industry profits .
- The promise of bigger profits gives oligopolists an incentive to cooperate.
- A firm may agree to collude and then break the agreement, undercutting the profits of the firms still holding to the agreement.
- The leader will typically set the price to maximize its profits, which may not be the price that maximized other firms' profits.
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- Microeconomics deals with the economic interactions of a specific person, a single entity, or a company.
- Microeconomics assumes businesses are rational and produce goods that maximizes their profit.
- If each firm takes the most profitable path, the principles of microeconomics state that the market's limited resources will be allocated efficiently.
- Urban Economics: challenges faced by cities, such as sprawl, traffic congestion, and poverty.
- Law and Economics: applies economic principles to the selection and enforcement of legal regimes.
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- Economists use assumptions in order to simplify economics processes so that they are easier to understand.
- As a field, economics deals with complex processes and studies substantial amounts of information.
- Individuals maximize utility (as consumers) and firms maximize profit (as producers).
- Examples of such assumptions include perfect information, profit maximization, and rational choices.
- Assess the benefits and drawbacks of using simplifying assumptions in economics