Answered: economic profit serves as a beacon to…

Business

Economics

economic profit serves as a beacon to entrepreneurs. This means

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 2PA

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Question

I need full explanation to these questions

1. According to the text, economic profit serves as a beacon to entrepreneurs. This means

a. A positive economic profit sends a warning to investors not to invest more.

b. A negative economic profit sends a signal to investors that it is time to invest more.

c. A zero economic profit sends a warning to investors not to invest more.

d. A positive economic profit attracts resources while a negative economic profit sends resources away.

e. None of the above.

2. The difference between economic profit and accounting profit is

a. Average costs

b. Direct costs

c. Economic costs

d. Variable costs

e. Marginal costs

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