During a Year of Operation, Knight’s Electric, LLC Collects $5,000,000

question 36

Multiple Choice

During a year of operation, Knight’s Electric, LLC collects $5,000,000 in revenue and spends $3,500,000 on labor expense, raw materials, rent, and utilities. Knight’s owner has provided $1,000,000 of her own money to her business instead of investing the money and earning a 12 percent annual rate of return.
-Knight's explicit costs for the year are $______________,its implicit costs are $______________,and thus Knight's total economic cost is $______________.

• A)$3,500,000; $1,000,000; $4,500,000
• B)$3,500,000; $120,000; $3,620,000
• C)$4,500,000; $1,000,000; $5,500,000
• D)$5,000,000; $1,000,000; $6,000,000

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Definitions:

Market Share

The portion of total industry revenue attributed to a specific company over a predetermined time frame.

Concentration Ratio

A measure of the market share controlled by the largest firms within an industry, used to indicate the degree of market competition.

Market Share

The percentage of an industry's sales that a particular company controls.

Herfindahl-Hirschman Index

A measure of market concentration used to determine the level of competition within an industry, calculated by summing the squares of the market shares of all firms in the market.