The following figure shows the cost and revenue structures of a firm. MC represents the marginal cost curve, AC represents the average cost curve, AR represents the average revenue curve, and MR represents the marginal revenue curve. P* is the equilibrium price and Q* is the equilibrium output.Figure 9.5

-The accounting profit of a business firm is also called:
A)royalty income.
B)net income from equity.
C)compensatory income.
D)windfall gain.
E)net operating income.

Question

The following figure shows the cost and revenue structures of a firm. MC represents the marginal cost curve, AC represents the average cost curve, AR represents the average revenue curve, and MR represents the marginal revenue curve. P* is the equilibrium price and Q* is the equilibrium output.Figure 9.5
 
-The accounting profit of a business firm is also called:
A)royalty income. 
B)net income from equity. 
C)compensatory income. 
D)windfall gain. 
E)net operating income.

Quizplus · Accepted Answer

The accounting profit of a business firm is also called net operating income, which is the difference between total revenue and total cost, including explicit costs such as rent and salaries as well as implicit costs such as the opportunity cost of using owner's own capital. None of the other options given are synonymous with accounting profit.

The Following Figure Shows the Cost and Revenue Structures of a Firm