In working out your responses to the Discussion Question, you should choose examples from your own experience or find appropriate cases on the Web that you can discuss. Credit will be given for references you make to relevant examples from real companies. 

(a) Discuss the difference between economic costs and accounting costs. Which are important for the calculation of economic profits of the firm?

(b) Discuss the differences between the long run and the short run. What are the implications for the firm of making decisions in the short run and making decisions in the long run? Discuss the limitations and freedom of the two time horizons. 

Explain your answers and support your answer with theory and examples.