Sally owns a beauty shop that generates a total revenue of $90,000 per year. She pays her employees a total of $45,000 . pays $10,000 for rent, insurance, and utilities; and pays $15,000 for beauty supplies such as hair spray and shampoo. Sally is glad to have the shop, because her next best alternative is to work as a cafeteria attendant for a salary of $8,000 a year. From this we can conclude
that Sally
a. would earn more working at the cafeteria
b. makes an economic profit of $20,000
c. makes an economic profit of $12,000
d. has total explicit costs of $78,000
e. has total implicit costs of $12,000
C
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Opportunity cost is the
a. cost incurred when one fails to take advantage of an opportunity. b. cost incurred in order to increase the availability of attractive opportunities. c. cost of the best option forgone as a result of choosing an alternative. d. drudgery of the undesirable aspects of an option.
An increase in supply, holding demand constant, will cause:
a. Higher prices and a larger quantity sold b. Lower prices and a larger quantity sold c. Higher prices and a smaller quantity sold d. Lower prices and a smaller quantity sold
In the above figure, if a firm is cleaning up Q4 units of pollution, it is an
A. efficient solution, because marginal social benefits are greater than marginal social costs. B. efficient solution, because marginal social benefits are equal to marginal social costs. C. inefficient solution, because marginal social benefits are greater than marginal social costs. D. inefficient solution, because marginal social costs are greater than marginal social benefits.
________ involves a country selling its exports at a price lower than its cost of production.
A. An export quota B. Having an absolute advantage C. Dumping D. Having a comparative advantage