Suppose that you open your own business and earn an accounting profit of $40,000 per year. When you started your business, you left a job that paid you a $25,000 salary annually. Also, suppose that you invested $70,000 of your own funds to start up your
business. If the normal rate of return on capital is 5 percent, your economic profit is
A) $15,000.
B) -$11,500.
C) $11,500.
D) -$55,000.
Answer: C
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A) rise; shift up B) rise; shift down C) fall; shift up D) fall; shift down
Legislation that makes it illegal to require union membership as a condition of continuing employment is the
A) National Labor Relations Act. B) Wagner Act. C) Congress of Industrial Organizations. D) collection of right-to-work laws.
Equilibrium price is _____.
(Consider This) Past costs that are not affected by new decisions are known as:
A. variable costs. B. fixed costs. C. marginal costs. D. sunk costs.