Commerce Exam > Commerce Questions > When AR=Rs. 10 and AC=Rs. 8, the firm makes?a...
Start Learning for Free
When AR=Rs. 10 and AC=Rs. 8, the firm makes?
- a)Gross profit
- b)Supernormal profit
- c)Normal profit
- d)Net profit
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernorma...
Supernormal profit is defined as extra profit above that level of normal profit.
Here the firm earns profit of Rs. 2 over the cost occurred.
Here the firm earns profit of Rs. 2 over the cost occurred.
Most Upvoted Answer
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernorma...
Explanation:
To determine the type of profit a firm makes, we need to compare the average revenue (AR) and average cost (AC) of production.
If AR>AC, the firm makes a profit.
If AR=AC, the firm makes a normal profit.
If AR
In this case, AR=Rs. 10 and AC=Rs. 8.
Therefore, the firm makes a gross profit of Rs. 2 per unit sold.
However, to determine if the firm makes a supernormal profit, we need to compare the profit per unit to the opportunity cost of capital.
If the profit per unit is greater than the opportunity cost of capital, the firm makes a supernormal profit.
If the profit per unit is equal to the opportunity cost of capital, the firm makes a normal profit.
If the profit per unit is less than the opportunity cost of capital, the firm makes a subnormal profit.
Since we do not have information about the opportunity cost of capital, we cannot determine if the firm makes a supernormal profit.
Therefore, the correct answer is option B, the firm makes a gross profit but we cannot determine if it makes a supernormal profit without additional information.
To determine the type of profit a firm makes, we need to compare the average revenue (AR) and average cost (AC) of production.
If AR>AC, the firm makes a profit.
If AR=AC, the firm makes a normal profit.
If AR
In this case, AR=Rs. 10 and AC=Rs. 8.
Therefore, the firm makes a gross profit of Rs. 2 per unit sold.
However, to determine if the firm makes a supernormal profit, we need to compare the profit per unit to the opportunity cost of capital.
If the profit per unit is greater than the opportunity cost of capital, the firm makes a supernormal profit.
If the profit per unit is equal to the opportunity cost of capital, the firm makes a normal profit.
If the profit per unit is less than the opportunity cost of capital, the firm makes a subnormal profit.
Since we do not have information about the opportunity cost of capital, we cannot determine if the firm makes a supernormal profit.
Therefore, the correct answer is option B, the firm makes a gross profit but we cannot determine if it makes a supernormal profit without additional information.
Free Test
FREE
| Start Free Test |
Community Answer
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernorma...
When average revnue are greater than average cost you are having supernormal or abnormal profits !
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer?
Question Description
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer?.
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer?.
Solutions for When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice When AR=Rs. 10 and AC=Rs. 8, the firm makes?a)Gross profitb)Supernormal profitc)Normal profitd)Net profitCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup