Alicia Spends $20,000 on Remodeling a Storefront That She Then

question 101

Multiple Choice

Alicia spends $20,000 on remodeling a storefront that she then opens as a flower shop. Her business has not been very successful, and she needs an additional $8,000 to keep the flower shop. Which of the following is true?

• A) The $20,000 Alicia spent on remodeling represents a part of the total variable cost of her business.
• B) The $8,000 represents her marginal costs of production.
• C) The $20,000 Alicia spent on remodeling is a fixed cost of her business.
• D) The $8,000 Alicia needs to keep the flower shop open represents her total fixed costs.

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Definitions:

Self-control

Self-control is the ability to regulate one's emotions, thoughts, and behavior in the face of temptations and impulses.

Equity Theory

An assumption that how much people are willing to contribute to an organization depends on their assessment of the fairness, or equity, of the rewards they will receive in exchange.