Economic Profit (EP) Is Calculated as Follows

question 56

Multiple Choice

Economic profit (EP) is calculated as follows:

• A) EP = (ROI - r) * (capital invested) where r = cost of capital
• B) EP = (ROI + r) * (capital invested) where r = cost of capital
• C) EP = (ROI) * (capital invested)
• D) none of the above

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Definitions:

Economic Capital

The assets or resources that an individual or entity has, which can be used to produce economic value.

Norms

Shared expectations or rules within a culture or society that guide and constrain behavior, establishing standards of conduct.

Stratification

The hierarchical arrangement of individuals or groups in a society based on wealth, power, status, or other criteria that leads to unequal access to resources and opportunities.

United States

A federal republic consisting of 50 states, a federal district, five major self-governing territories, and various possessions, known for being a leading world economic and military power.