Part 5C - Revenues, Cost, and Profit 1. tell me how TO calculate accounting prof
ID: 1223158 • Letter: P
Question
Part 5C - Revenues, Cost, and Profit
1. tell me how TO calculate accounting profit.
2. tell me how TO calculate economic profit, starting from the end of your answer to #1. That is, what else do you need to do?
3. Suppose you spend $400 on ingredients, and spend two days baking various breads to sell at a bake sale. At the sale, you sell what you can for $500, and have to throw away the rest, since homemade breads just don't last long. You tell yourself "at least I made a profit of $100!" What kind of profit is this? What would you guess that I (an economist) would say your profit was? Calculate an estimate.
PLEASE HELP FOR MICROECONOMICS
Explanation / Answer
Multiple questions asked.
Q1 is answered below.
Accounting profit refers to the monetary profits received by the firm. That is, it equals monetary costs incurred subtracted from total revenues earned. It does not take into account the opportunity cost of the transaction. It is also known as the total earnings of the company made.