What is the basic economic problem that all persons, businesses and countries face? What are the differences in the way a market process vs. a command process attempt to deal with the basic economic problem? What is the difference between Economic Profits and Accounting Profits? Discuss the importance of taking into account the opportunity costs (implicit costs) in investment decisions. Illustrate you discussion with examples.
Thanksfor feedbacks 1. The basic economic problem is economic scarcity. Scarcity occurs when there is not enough food, water, needed supplies, or certain goods being produced for everyone who wants those resources. All persons, businesses and countries face this problem because the want for resources and products are unlimited, but they cannot be fulfilled. Individuals have to differentiate needs and wants when it comes to scarcity, because there can be enough resources for needs, but not enough resources for all of the wants. Most people are able to deal with scarcity by limiting their use of supplies and knowing how important some resources are. It can be easy to get certain resources every day, until those resources cannot be produced as quickly anymore. A market process deals with scarcity differently than a command process. A market process uses strategy when pricing resources to manage production and control the use of products. For the command economy, the government is in charge of the resources. Unlike the market process where the prices come naturally, the command process prices are set by the government. (Kramer, 2021). Accounting profits deal with revenues and expenses. The difference between accounting profits and economic profits is that economic profits include opportunity costs as well as revenues and expenses. Also, economic profit also includes explicit and implicit costs. The importance of taking into account the implicit costs is because they help with decision making. They represent the uses of already owned resources (Explicit and Implicit Costs, n.d.). Overall, scarcity is a big problem and will never fully be gone, but the different ways that it is handled may be helpful in the long run. ReferencesExplicit and Implicit Costs, and Accounting and Economic Profit. Principles of Economics. (n.d.). BC Campus.Retrieved January 2022, from https://opentextbc.ca/principlesofeconomics/chapte…Kramer, L. (2021, May 29). Market Economy vs. Command Economy: What’s the difference? Investopedia.Retrieved January 2022, from https://www.investopedia.com/ask/answers/100314/wh…2. As the professor said in the University live recording, we must comprehend business economics. According to Keat et al. (2013), economics is the research of the actions of humans in producing, spreading, and consuming material goods along with solutions in a globe of limited resources. One common problem that persons, organizations, and nations encounter is the deficiency of objects to create goods. For example, I keep hearing that the materials used to make computer boards are becoming harder to find; we use technology every day in our lives, which can become a problem if those materials are scarce. The difference between Market processes and Command processes is that market procedure is the supply as well as the need to answer the concerns “what” and also “how” and “for whom” (Keat et al., 2013). The Command procedure is used by the federal government or centralized authority to address those three inquiries.The economy can be affected by pollution control plans that have unintentional straight and indirect cost effects for economic tasks via affecting prices, work, trade, and also revenue distribution(Kyei et al., 2019). The distinction between economic revenues and accounting profits is that financial revenues are defined as total revenue and possibility expenses, minus all the financial costs. Audit profits are a measurement and communication function (Ryan, 2007). The bookkeeping profits income generally is more than economic costs.According to Keat et al. (2013), possibility prices, also called implicit costs, is when time and interest on investment add in the direction of revenue in a business. Working in surgery in a hospital, I see the surgeons utilizing a robot; the hospital invested money in a DaVinci robot to be efficient. An example of opportunity cost is when a hospital supports money in a robot and considers unit cost factors and time (Fuertes-guiró et al., 2016). The surgeons can do Laparoscopic surgeries in 20minutes versus 45minutes; the opportunity costs consider the two methods. Fuertes-guiró, F., Girabent-farrés, M., & Viteri-velasco, E. (2016). Opportunity cost in the economic evaluation of da Vinci robotic assisted surgery. The European Journal of Health Economics : HEPAC, 17(3), 245-256. http://0634jgfot.mp01.y.http.dx.doi.org.prx-keiser…Keat, P. G., Y., Y. P. K., & Erfle, S. E. (2013). Managerial Economics: Economic Tools for today’s decision makers. Pearson. Kyei, C., & Rashid, H. (2019). Managing the trade-off between economic growth and protection of environmental quality: the case of taxing water pollution in the Olifants river basin of South Africa. Water Policy, 21(2), 277-290. http://0634jgfot.mp01.y.http.dx.doi.org.prx-keiser…Ryan, J. (2007). THE RELATIONSHIP BETWEEN ACCOUNTING PROFIT AND ECONOMIC INCOME. Australian Accounting Review, 17(3), 33-46. https://0634j0g19-mp02-y-https-www-proquest-com.pr…
Explanation & Answer:
User generated content is uploaded by users for the purposes of learning and should be used following FENTYESSAYS.COM ESSAY’s honor code & terms of service.