Libby Has a Business Using No Owned Capital and Makes

question 33

Multiple Choice

Libby has a business using no owned capital and makes an accounting profit of $52,000 a year. Libby could have worked for Verizon Wireless with a pay of $35,000 a year, but she would not have had time to run her business. The economic profit from Libby's business per year is

• A) $87,000.
• B) $35,000.
• C) $17,000.
• D) − $17,000.

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Definitions:

Job Descriptions

A formal document that outlines the duties, responsibilities, required qualifications, and reporting relationships of a specific job.

Division of Labor

The separation of tasks in any economic system or organization so that participants may specialize, increasing efficiency and productivity.

Flatter Span

A management structure with fewer levels of hierarchy and a broader span of control, allowing for more direct communication and less formal supervision.

Decentralization

The distribution of decision-making power and authority from a central figure or location to multiple smaller units or levels within an organizational hierarchy.