Amy Spends $6,000 on Remodeling a Storefront That She Then

question 78

Multiple Choice

Amy spends $6,000 on remodeling a storefront that she then opens as a take-out deli. After opening her deli her business is terrible and she needs an additional $2,000 to keep the deli open. Which of the following is true?

• A) The $6,000 Amy spent on remodeling represents a part of the total variable cost of her business.
• B) The $6,000 Amy spent on remodeling represents a sunk cost of her business.
• C) The $2,000 Amy needs to keep the deli open represents her marginal costs of production.
• D) The $2,000 Amy needs to keep the deli open represents her total fixed costs.

---

Definitions:

Principal

The original amount of a debt or investment, exclusive of any interest or growth.

Principal

The main party involved in a financial transaction or agreement, such as the amount of money borrowed in a loan, or a primary actor in a contract.

Implied Warranty

A legal concept that guarantees that a product or service sold will perform as expected, even if not explicitly promised by the seller.

Authority

The capacity or entitlement to direct actions, decide outcomes, and command adherence.