Question

1- Suppose that a small business takes in monthly revenue of $100,000. Labor, rental, energy, and other purchased input costs are $70,000. The owner/entrepreneur could earn $5,000 per month in another job, and the owner/entrepreneur could get a return of $5,000 each month if she sold her business and invested the net proceeds in a financial asset, such as a treasury bond. Which of the following correctly describes her monthly economic profit?

Answer 1

1.

Economic profit = Total revenue - (Explicit costs + Implicit costs)

Here Total revenue is $ 100,000
Explicit costs are $ 70,000
Implicit costs are $ 10,000 (opportunity costs)

Economic profit = 100,000 - 70,000 - 10,000 = $ 20,000

Economic profit is $ 20,000

55.

Correct answer is Option b 18,000

For small cars under 6,000 lbs. the depreciation is capped at $ 18,000 for the first year.