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ACCOUNTING COST: The actual outlays or expenses incurred in production that shows up a firm's accounting statements or records. Accounting costs, while very important to accountants, company CEOs, shareholders, and the Internal Revenue Service, is only minimally important to economists. The reason is that economists are primarily interested in economic cost (also called opportunity cost). That fact is that accounting costs and economic costs aren't always the same. An opportunity or economic cost is the value of foregone production. Some economic costs, actually a lot of economic opportunity costs, never show up as accounting costs. Moreover, some accounting costs, while legal, bonified payments by a firm, are not associated with any sort of opportunity cost.
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Lesson 7: Market | Unit 2: The Numbers
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Page: 7 of 22
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Topic:
Market Agreement
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What would happen if we had different prices in the market?- At 10 cents, the quantity demanded is 800 tapes and the quantity supplied is 0 tapes. This is not a suitable price. The buyers can't buy all that they want.
- At 90 cents, the quantity demanded is 0 tapes and the quantity supplied is 800 tapes. This is not a suitable price, either. The sellers can't sell all that they want.
- Buyers or sellers are not satisfied at these prices and will take corrective action.
This is not equilibrium.
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ACCOUNTING PROFIT The difference between the revenue received by a firm and the explicit accounting cost incurred. This is the profit listed on a firm's balance sheet, appears periodically in the financial sector of the newspaper, and is reported to the Internal Revenue Service for tax purposes. While accounting profit is the "standard" designation of profit used in the business world, economists prefer to use economic profit
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale trying to buy either a replacement remote control for your television or a replacement nozzle for your shower. Be on the lookout for the happiest person in the room.
Your Complete Scope
This isn't me! What am I?
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Mark Twain said "I wonder how much it would take to buy soap buble if there was only one in the world."
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"Courage is the ladder on which all the other virtues mount." -- Claire Boothe Luce, diplomat, writer
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PPT
Personal Property Tax
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