Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's economic profits?
A. $78,000
B. $142,000
C. $138,000
D. $150,000
A. $78,000
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All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____
a. efficient, inefficient b. optimal, irrational c. attainable, unattainable d. rational, zero-cost e. unattainable, efficient
If nations trade on the basis of comparative advantage
A. a nation can usually gain only it has an absolute advantage. B. all trading partners share equally in the gain. C. all trading partners share in the gain with distribution determined by their negotiating ability. D. a nation with an absolute advantage gains more than the other nations.
Which of the following explains why economic choices must be made?
a) The factors of production are used inefficiently. b) The factors of production are scarce. c) The factors of production are expensive. d) The factors of production are of inferior quality.
Suppose that inventories were $40 billion in 2012 and $50 billion in 2013. In 2013, national income accountants would:
A. add $10 billion to other elements of investment in calculating total investment. B. subtract $10 billion from other elements of investment in calculating total investment. C. add $45 billion (= $90/2) to other elements of investment in calculating total investment. D. subtract $45 billion (= $90/2) from other elements of investment in calculating total investment.