Rhonda Is Convinced She Has the Best Idea for a New

question 305

True/False

Rhonda is convinced she has the best idea for a new business. Unfortunately, her business would require a fairly high initial investment and Rhonda has poor credit and very little personal wealth. She would be unlikely to find success if she organized her business as a sole proprietorship.

---

Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profit beyond the normal return on investment.

Marginal Decision Rule

A principle stating that an action should be taken if, and only if, the marginal benefits are greater than or equal to the marginal costs.

MR

Short for Marginal Revenue, it refers to the extra revenue that an organization receives from selling one more unit of a good or service.

Maximizing Profit

The process a firm adopts to establish the optimal price and quantity for maximal profit.