Mary Owns Her Own Business and Works Full Time in the Store

question 108

Multiple Choice

Mary owns her own business and works full time in the store without paying herself a salary. She has $20,000 of her own money invested in the store that she withdrew from her savings account, which earned 10 percent interest. She was offered a job last year making $28,000 per year but turned it down. If Mary's accounting statements show revenues of $100,000 and accounting costs of $60,000, then Mary's

• A) accounting profit is $20,000 and her economic profit is zero.
• B) accounting profit is $40,000 and she is making an economic loss of $8,000.
• C) accounting profit is $40,000 and her economic profit is $10,000.
• D) accounting and economic profit is $40,000.

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Definitions:

Economic Objective

A goal that an economy aims to achieve in a specified period, such as economic growth, low unemployment, or price stability.

Capital Investment

Funds invested in a business or project with the expectation of generating new wealth, acquiring assets, or improving future business prospects.

Sherman Act

A foundational antitrust law in the United States aimed at prohibiting monopolies and fostering competition.

Antitrust Charges

Legal actions or penalties brought against corporations or organizations that are charged with practices deemed to restrain trade and reduce competition in the marketplace.