Joni starts her own business. She quits her $50,000 a year job, rents an office for $15,000 a year, pays wages and salaries of $50,000 a year, utilities of $4,000 a year, and materials of $20,000. Joni uses her own car for sales work rather than leasing an equivalent car for $6000 a year. If revenues are $140,000, her accounting profit and economic profit are respectively
A. $51,000 and -$5,000.
B. $45,000 and $51,000.
C. $51,000 and $5,000.
D. $45,000 and $1,000.
Answer: A
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Discounting is the process whereby
A) present values are adjusted to their future value, using the interest rate. B) future values are converted to their value today, using the interest rate. C) product prices are reduced (discounted) to increase sales and profits today. D) future values are adjusted for inflation.
From the standpoint of ________, specialization in lending is surprising but makes perfect sense when one considers the ________ problem
A) moral hazard; diversification B) diversification; moral hazard C) adverse selection; diversification D) diversification; adverse selection
The marginal cost of labor for a perfectly competitive firm is given by:
a. the change in total revenue that results from employing an additional worker. b. the market wage rate. c. its marginal revenue product curve. d. the demand curve for labor. e. the marginal product of labor.
Which of the following is true?
a. When increased government purchases or expansionary monetary policy does give the economy a boost, no one knows precisely how long it will take to do so. b. Given the difficulties of timing stabilization policy, an expansionary monetary policy intended to reduce the severity of a recession may instead add inflationary pressures to an economy that is already overheating. c. If velocity changes, but it moves in a fairly predictable pattern, the connection between money supply and GDP is still fairly predictable. d. All of the above are true.