The Following Is Cost Information for the Creamy Crisp Donut

question 56

Multiple Choice

The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's
Forgone interest on personal funds used to finance the business = $6,000
Creamy Crisp

• A)has lower implicit costs, including a normal profit, than its explicit costs.
• B)is earning a normal profit but not an economic profit.
• C)is earning an economic profit.
• D)is suffering an economic loss, when implicit costs are considered.

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Definitions:

Importer

An individual or company that buys goods or services from abroad for domestic use or sale.

World Price

The international market price of a good or service, determined by global supply and demand.

Domestic Supply

The total amount of a product or service that is available for consumption or use within a domestic market.

Trade Restrictions

Regulations imposed by governments to limit the free exchange of goods and services across borders, including tariffs, quotas, and embargoes.