Suppose That You Open Your Own Business and Earn an Accounting

question 63

Multiple Choice

Suppose that you open your own business and earn an accounting profit of $35,000 per year. When you started your business, you left a job that paid you a $30,000 salary annually. Also, suppose that you invested $70,000 of your own funds to start up your business. If the normal rate of return on capital is 10 percent, your economic profit is

• A) $5,000.
• B) -$5,000.
• C) $2,000.
• D) -$2,000.

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Definitions:

Overcurrent Protection

Systems or devices designed to protect electrical circuits from damage caused by excess current, typically through the use of fuses or circuit breakers.

Overload Protection

A safety feature designed to protect electrical circuits from damage caused by excessive current flow, typically via circuit breakers or fuses.

Overload Unit

A device or component in electric motors designed to protect them from running over their designed load for too long, preventing overheating or damage.

Normally Closed

Refers to a switch or relay that is in a closed (conducting) state when at rest, opening only when activated.