Richard Bland quit his job as an accounting professor to start his own restaurant. He gave up a salary of $50,000 per year and withdrew $100,000 in bank CDs earning 5 percent to buy a building and equipment. In the restaurant’s first year it had direct expenses of $75,000 and revenues of $150,000. The restaurant’s economic profit was
A. $15,000.
B. $20,000.
C. $75,000.
D. not possible to determine from the information given.
Answer: B
You might also like to view...
Suppose a bank has checkable deposits of $100,000 and the required reserve ratio is 20 percent. If the bank currently has $100,000 in reserves, it could expand the money supply by as much as:
a. $100,000. b. $400,000. c. $0. d. $20,000. e. $80,000.
Tina's marginal utility of her first piece of cake is 15, while Jerry's marginal utility of his first piece of cake is 24 . An economist would conclude that
a. Tina likes cake more than Jerry likes cake b. Jerry likes cake more than Tina likes cake c. Tina likes cake less than Jerry likes cake d. Jerry likes cake less than Tina likes cake e. we can't judge who values cake more
In the vertical segment of the aggregate supply curve,
a. real GDP increases with increasing unemployment b. competition among producers for already-employed resources forces the price level downward c. the economy is at full employment d. producers are able to hire more workers at lower wages e. increases in real GDP come only at the expense of higher price levels
Economic efficiency requires that a natural monopoly's price be
A) equal to average total cost where it intersects the demand curve. B) equal to marginal cost where it intersects the demand curve. C) equal to average variable cost where it intersects the demand curve. D) equal to the lowest price the firm can charge and still make a normal profit.