Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hangar that he could have rented out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an
airplane for $6,000 . pays $1,300 for fuel and maintenance, and hires one worker for $30,000 . Sam's total revenue from pilot training classes this year equaled $90,400 . How did Sam's business do this year?
a. Sam realized an economic profit of $3,400 this year.
b. Sam realized an economic loss of $3,400 this year.
c. Sam realized an economic profit of $5,800 this year.
d. Sam realized an economic profit of $3,800 this year.
e. Sam realized an economic loss of $3,800 this year.
C
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]If consumers become more optimistic, which of the following is the most likely in the short run?
a. A decrease in output, a decrease in money demand, and a decrease in the interest rate. b. An increase in output, an increase in money demand, and an increase in the interest rate. c. An increase in output, an increase in money demand, and a decrease in the interest rate. d. A decrease in output, an increase in money demand, and a decrease in the interest rate. e. An increase in output, a decrease in money demand, and a decrease in the interest rate.
"Never put all your eggs in one basket." This saying refers to the concept of
a. averaging. b. market timing. c. diversification. d. leveraging.