The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp:
A. has lower implicit costs, including a normal profit, than its explicit costs.
B. is earning a normal profit but not an economic profit.
C. is earning an economic profit.
D. is suffering an economic loss, when implicit costs are considered.
Answer: C
You might also like to view...
Real interest rates at times have been negative. Why would anyone lending money agree to a negative real interest rate?
What will be an ideal response?
If output per capita grows by a constant 5% per year, then the standard of living would grow by about ________ over 3 years
A) 12% B) 16% C) 17% D) 18% E) 20%