3. profit Flashcards
1
Q
where is the point of profit maximisation
A
when MC=MR, this is where firms will make their greatest possible profits
2
Q
when do abnormal profits occur
A
when AR>AC at MC=MR
3
Q
when do normal profits occur
A
when AR=AC at MC=MR
4
Q
what is accounting profit
A
the actual revenue and cost calculations generated by bookkeepers, monetary value that has actually been spent and earned
5
Q
what is economic profit
A
profit - opportunity cost
6
Q
why is profit important
A
- finance for capital investment and research
- market entry
- demand for and flow of factor resources
