Susan used to work as a telemarketer, earning $25,000 per year. She gave up that job to start a catering business. In calculating the economic profit of her catering business, the $25,000 income that she gave up is counted as part of the catering firm’s

Susan used to work as a telemarketer, earning $25,000 per year. She gave up that job to start a catering business. In calculating the economic profit of her catering business, the $25,000 income that she gave up is counted as part of the catering firm’s

Susan used to work as a telemarketer, earning
$25,000 per year. She gave up that job to start a catering business. In
calculating the economic profit of her catering business, the $25,000 income
that she gave up is counted as part of the catering firm’s

a. total
revenue.

b. opportunity
costs.

c. explicit
costs.

d. All
of the above are correct.

Refer to the following information to answer Questions 40
and 41.

Zach
took $500,000 out of the bank and used it to start his new cookie business. The
bank account pays 4 percent interest per year. During the first year of his
business, Zach sold 12,000 boxes of cookies for $3 per box. Also, during the first
year, the cookie business incurred costs that required outlays of money
amounting to $14,000.

40. Zach’s accounting profit for the year was

a. $–478,000.

b. $–56,000.

c. $2,000.

d. $22,000.


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