Two Friends, Diane and Sam, Own and Run a Bar

question 154

Multiple Choice

Two friends, Diane and Sam, own and run a bar. Diane tends bar on Monday, Wednesday, and Friday and receives a wage in addition to tips. Sam tends bar on Tuesday, Thursday, and Saturday and receives only tips. Which of the following represents an implicit cost of operating the bar?

• A) Diane's wage.
• B) Sam's time.
• C) Diane's tips.
• D) Sam's tips.
• E) Both Diane's and Sam's tips.

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Definitions:

Net Proceeds

The amount of money received from a transaction after deducting all associated costs and expenses.

Spread

The difference between two prices, rates, or yields, often referring to the bid-ask spread in securities.

Direct Costs

Expenses that can be directly tied to the production of specific goods or services, such as labor and materials.

Floatation Costs

The various costs associated with taking a company public, including legal, accounting, and marketing expenses, among others.