Mike starts his own business after quitting his job in which he made $75,000. Expenses include $100,000 for wages and salaries, which includes a wage for the owner of $75,000, utilities of $5000, equipment of $50,000, and materials of $40,000. If
revenues are $200,000, his accounting and economic profits are respectively
A) $80,000 and $5,000.
B) -$70,000 and -$70,000.
C) -$70,000 and $5,000.
D) $5,000 and $5,000.
Answer: D
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Consumer finance companies, because of the __________-term nature of their liabilities, prefer to hold __________-term assets
A) long; long B) long; short C) short; long D) short; short
A cost function has economies of scale if
A) average fixed costs fall as production increases. B) total costs fall as production increases. C) the average total cost falls as production increases. D) it is less expensive to produce goods jointly rather than separately.
The principle marginal revenue equal-marginal-cost rule for maximizing profit
A) does not apply to firms in the monopoly or oligopolistic industries. B) applies only for firm in perfect competition but not in monopolistic competition. C) applies to new firms but not to existing firms in an industry. D) applies to all the firms in all industries.
When operating at the profit-maximizing/loss-minimizing level of output, total revenue minus total cost equals
A. $350.
B. $240.
C. $225.
D. -$240.