Decision making by individuals and firms - Costs, Benefits , and Profits - Accounting profit versus Economic profit
7 important questions on Decision making by individuals and firms - Costs, Benefits , and Profits - Accounting profit versus Economic profit
How is the accounting profit calculated?
- First we calculate the revenue from a particular decision
- then we look at the revenue from not taking the decision
- then we calculate any other costs that is incurred due to decision
- then we subtract the revenue from not taking the decision from the revenue from a particular decision
- then we subtract the answer to the previous one with the any other costs that is incurred due to decision
- that is the accounting profit of a decision
Why do we need to calculate economics profit to get the best possible economics outcome? And how is it calculated? Which on is bigger EP or APwhy?
- The economics profit looks at the implicit cost in addtion to the explicit so that i gives a more accurate picture of what is being lost.
- the economic profit will be less that the accounting profit because of the implicit cost that is subtracted from the revenue from a particular decision
- economic profit is calculated using the revenue from a particular decision and subtracting it from the (explicit and implicit cost of that decision).
- accounting profit is larger since it does not include the implicit cost
Can we assume that if a decision does not have an explicit cost that it has no opportunity cost when we use our own capital
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I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
What does capital mean? And what does it include for individual and for firms?
- Capital is the total value of the assests of an individual or a firm.
- An individuals capital consisits of
- cash in the in banks
- stocks and bonds
- ownership value of real estate such as a house
- in the case of a business
- used parts
- inventory of unsold goods
- equipment
- tools
What is the difference between financial assets and physical assets? 3 Examples of both?
- Financial assets are assets obtain in the financial marker such as
- cash
- stocks
- bonds
- physical assets are assets that are tangible and workable such as
- buildings
- equipment
- tools
- inventory
How do we describe the implicit cost of the use of capital in a decision made?
- The income the owner of the capital could have earned if that capital had been employed in the next best alternative use.
- Interest from the bank
According to the net effect of the implicit cost of capital, is there a difference in costs when deploying our capital in alternative uses
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