Exam (elaborations)
ECS1501 Assignment 10 2024 | Due 21 October 2024
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ECS1501 Assignment 10 Semester 2 October 2024
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2024 ECS1501-24-Y Assessments Assessment 10Opened: Friday, 18 October 2024, 8:00 AM I confirm
Closes: Monday, 21 October 2024, 9:00 PM
Started on Sunday, 20 October
2024, 7:51 AM
State Finished
Completed on Sunday, 20 October
2024, 8:13 AM
Time taken 29 mins 17 secs
Marks 10.00/11.00
Grade 99.41 out of 100.00
Question 1
Complete
Not graded
@ 1confirm.
O I do not confirm.
Queston 2
Complete
Mark 1.00 out of 1.00
What will happen if a shoe firm sells its shoes at a price lower than the opportunity cost of the inputs used in the production process?
C The firm will possibly make an economic profit and an accounting loss.
@ The firm will possibly make an accounting profit but will make an economic loss.
C The firm will make both accounting and economic profits.
C The firm will make both accounting and economic losses.
Let's use some numbers to understand this point.
Economic profit= TR -TC = TR- (EXPLICIT COST+ IMPLICIT COST (OPPORTUNITY COST)]
Accounting profit= TR-TC = TR- (EXPLICIT COST)
If for example the TR= R100 (price is R10 and quantity sold is 10 units), EXPLICIT COST= RS0 AND IMPLICIT COST= R80
Then the economic profit/loss = 100 - (50 + 80) = -30
The accounting profit/loss is = 100- (50) = SO
Thus it is possible to make an accounting profit but the firm WILL make an economic loss.
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