Managerial Economics Essay Example | Topics and Well Written Essays - 250 words

Managerial Economics - stress ExampleFrom this study it is clear that be profit is the surplus money gained by the firm later deducting explicit costs such as labour from the total amount of revenue generated from its operations. On the another(prenominal) hand, the difference between the firms accounting profit and implicit as easy as explicit costs is known as economic profit. It is important for the managers to understand the difference between accounting and economic profits. Accounting profit denotes the firms market value to establish if it is operating viably. On the other hand, economic profit denotes if the firms economic condition is sound enough to hold out with operations or halt them. It should be positive for a firm to carry own with operations.This penning outlines that the majority of for profit firms atomic number 18 in business to generate profits from their operations. As such, the best charge to measure a firms performance is to determine its current level of profitability compared to its introductory profits for the same period. An increase in profits compared to the previous period entails that the firm is performing well while a decline in profits means that its performance is below expected standards since firms are mainly concerned with generating profits from their operations. The major types of profits include accounting and economic profits as outlined in the prompt below.Basically, accounting profit is the surplus money gained by the firm subsequently deducting explicit costs such as labour from the total amount of revenue generated from its operations.