Bill is an economics professor who earns $37,000 teaching but decides to leave and fulfill his dream of catering barbecues. During his year of barbecuing he earned total revenue of $60,000. He spent $30,000 on food and supplies
He also paid his wife $10,000 to help serve food. The normal profit for an entrepreneur running a barbecue business is $3,000. Bill also rented an industrial grill/fry truck for $12,000. Bill had an economic A) profit of $20,000.
B) loss of -$32,000.
C) loss of -$42,000.
D) profit of $28,000.
E) profit of zero.
B
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Why does the presence of imperfect information lead to inefficiency?
What will be an ideal response?
A key reason that most people did not anticipate the severity of the recession of 2007-2009 is that
A) they thought the Fed would reduce the target for the federal funds rate to a lower level. B) they did not believe that the federal government would actually bail out large financial institutions. C) they failed to see the financial crisis coming. D) they were more worried about rising inflation than about falling real GDP.