Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. What are Tom's economic profits?
A. $24,000
B. $35,000
C. -$6,000
D. $50,000
Answer: C
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In order to compute national income from GDP,
a. national income is first calculated, and then depreciation of capital and indirect business taxes are subtracted from it to get GDP. b. GDP is first calculated, and then gross private domestic investment is subtracted from it to get national income. c. GDP is first calculated, and then capital depreciation and proprietors' income are subtracted from it to get national income. d. GDP is first calculated, and then depreciation of capital is subtracted from it to get national income.
If the interest rates rise, the present values of future dollars will _______.
Fill in the blank(s) with the appropriate word(s).
How do competitive firms try to achieve market power? What is one way they try to accomplish this?
What will be an ideal response?
Products sold by monopolistically competitive firms are perfect substitutes of each other
a. True b. False Indicate whether the statement is true or false