If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm’s economic profits equal?
A. 6% of output
B. 10% of output
C. 12% of output
D. 8% of output
Answer:C
If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm’s economic profits equal?
A. 6% of output B. 10% of output C. 12% of output D. 8% of output