Use the Following to Answer Questions

question 116

Multiple Choice

Use the following to answer questions:
Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each. She employs five people, each of whom worked a total of 500 hours last year; she paid them $10 per hour. Her costs of equipment and raw materials add up to $75,000. Her business ability is legendary, and other companies have offered to pay Betty $100,000 to come to work for them. She also knows she could sell her cookie shop for $150,000. The bank in town pays an annual interest rate of 3% on all funds deposited with it.
-(Scenario: Betty's Cookie Shop) Given the information provided, Betty's implicit costs are:

• A) her salary if she worked elsewhere and interest she forgoes by not selling her shop and putting the money in the bank.
• B) the cost of labor, equipment, and raw materials.
• C) the revenue she receives from selling her cookies plus the cost of labor, equipment, and raw materials.
• D) revenue she receives from selling her cookies and her labor costs.

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Definitions:

Submandibular Gland

A salivary gland located beneath the floor of the mouth, responsible for producing saliva.

Sublingual Gland

A salivary gland located beneath the tongue, responsible for secreting saliva to aid in digestion.

Saliva

A watery fluid secreted into the mouth by glands, containing enzymes that initiate the breakdown of carbohydrates during digestion.

Divided

Separated into parts or pieces; often used to describe roads or cells that split into two or more pathways or segments.