Please
explain whether the following statements are true or false.
a. If the owner of a business pays himself no
salary, then the accounting cost is zero, but the economic cost is positive.
b. A firm
that has positive accounting profit does not necessarily have positive economic
profit.
c. If a firm hires a currently unemployed worker,
the opportunity cost of utilizing the worker’s services is zero.
a. False. The fixed cost is zero, but the variable cost can be positive. Therefore, the accounting cost can be positive.
ReplyDeleteb. True. The opportunity cost of a firm can be higher than the accounting profit. Because economic profit counts opportunity cost, economic cost can be negative.
c. True. The firm doesn't have another worker to hire.