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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When we draw an investment demand curve, we hold constant all of the following except:
A. the expected rate of return on the investment. B. business taxes. C. the interest rate. D. the present stock of capital goods.
In June there are 30,000 people classified as unemployed and the size of the labor force is 600,000. The only change between June and July is that 10,000 of the unemployed give up looking for work. Which of the following is true?
A. In June the unemployment rate was 6% and in July the unemployment rate was 3.8%. B. In June the unemployment rate was 3.8% and in July the unemployment rate was 6%. C. The unemployment rate in both June and July was 5%. D. In June the unemployment rate was 5% and in July the unemployment rate was 3.39%.