A binding price floor causes a shortage in the market

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs. The company earns $1.4 million in revenues and has $3.7 million in net worth. Based on this information, what is the economic profit for Harry's Hookas?

A) $200,000 B) $700,000 C) $900,000 D) $1.1 million

If a firm is operating at an output level where losses are minimized, the firm

A) has no incentive to stay in the industry. B) is better off exiting the industry. C) is maximizing profits. D) will shut down.