Kevin Wants to Open His Own Car Repair Shop

question 108

Multiple Choice

Kevin wants to open his own car repair shop. To do that he will need tools and other equipment. The two methods Kevin can use to pay for these items are:

• A) cash flow and balance sheets.
• B) accounts receivable and accounts payable.
• C) assets and liabilities
• D) debt and equity.

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Definitions:

Zero Economic Profits

A situation in perfectly competitive markets where firms earn just enough revenue to cover their total operating costs, leaving no supernormal profit.

Positive Economic Profits

The situation in which a firm's total revenues exceed its total costs, including both explicit and implicit costs, signaling that the firm is doing better than the next best alternative.

Profit

The financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Monopolistically Competitive Firm

A company that operates in a market with many competitors, each offering products that are similar but not identical, allowing for some degree of market power.