Maryann and Don Want to Open Their Own Deli

question 41

Multiple Choice

Maryann and Don want to open their own deli.To do so, Maryann must give up her job, at which she earns $20, 000 per year, and Don must give up his part-time job, at which he earns $10, 000 per year.They must liquidate their money market fund, which earns $1, 000 interest annually.The rent on the building is $10, 000 per year, and expenses for such necessities as utilities, corned beef, and pickles are $35, 000 annually.What is the explicit cost per year of operating the deli?

• A)$10, 000
• B)$35, 000
• C)$45, 000
• D)$31, 000
• E)$76, 000

---

Definitions:

Accounting Profit

The total revenue of a firm less its explicit costs; the profit (or net income) that appears on accounting statements and that is reported to the government for tax purposes.

Diseconomies of Scale

A situation in which a company or business grows so large that the costs per unit increase, leading to decreased efficiency.

Large-Scale Business

A business that operates on a large scale, often involving extensive operations, significant capital, numerous employees, and a wide geographical reach.

Law of Diminishing Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.