Suppose a Local Hardware Store Has Explicit Costs of $2

question 1

Multiple Choice

Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year.If the store earned an economic profit of $50,000 last year,this means that the store's accounting profit equaled:

• A)$94,000.
• B)$6,000.
• C)$2.05 million.
• D)$2.044 million.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which may or may not reflect the security's market value.

Stock Split

A corporate action to increase the number of outstanding shares while reducing the price per share, keeping the overall market capitalization the same.

Par Value

The face value of a bond or stock as specified by its issuer, which does not necessarily correspond to its market value.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, increasing the number of shares held by each shareholder.