Stan Owns a Software Design Business

question 9

Multiple Choice

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1,000 per month for interest on the loan.He has 10 employees, each of whom is paid $4,000 per month.Because his business has been successful, next month he will increase employee wages to $5,000.If the revenue from his business remains at its current level, Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

• A)The payments Stan makes to his employees are variable costs and explicit costs.
• B)The monthly payment Stan makes for his bank loan is an implicit cost.
• C)The monthly payment Stan makes for his bank loan is a fixed cost.
• D)The addition Stan is considering to make to his office would be an implicit cost.

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Definitions:

Vulgate Bible

The Latin version of the Bible translated by St. Jerome in the late 4th century, widely used in the Catholic Church.

Old Testament

The first part of the Christian Bible, consisting of a collection of ancient religious writings by the Jewish people, including history, poetry, and teachings.

Latin

A classical language belonging to the Italic branch of the Indo-European languages, originally spoken in Latium and Ancient Rome.

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The period during which Charlemagne ruled as King of the Franks and Lombards and later as the Emperor of the Carolingian Empire, from the late 8th century to the early 9th century.