Which of the following incentives is most important to a business according to the theory of the firm?

ANSWER CHOICES:

A)Low average total cost

B)Low marginal cost

C)High total revenue

D)High accounting profit

E)High economic profit

I CHOSE D and it was INCORRECT

Which of the following could explain why a firm would decrease production of a good despite making significant accounting profit?

ANSWER CHOICES:

A)The marginal cost equals the marginal benefit.

B)The opportunity cost of an alternative foregone is greater.

C)The economic profit is more than the accounting profit.

D)The economic profit is less than the accounting profit.

E)The fixed costs are unacceptably high.

I CHOSE C and it was INCORRECT