Suppose That Milo Left a Job, Where He Earned a Salary

question 165

Multiple Choice

Suppose that Milo left a job, where he earned a salary of $50,000 per year, in order to open an all-natural soap business. His insurance cost is $5,000; his material cost is $25,000; his lease payments are $10,000; and his revenue is $90,000. Milo's economic profit is

• A) $50,000.
• B) $90,000.
• C) $40,000.
• D) $0.

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Definitions:

Procedures for Incorporation

The standardized legal steps and requirements followed to legally form and register a corporation with the state or appropriate authority.

Challenge

A call to engage in a competition or contest.

Corporation

A legal entity separate from its owners, offering limited liability to its shareholders and able to own property and sign contracts.

Close Corporation

A corporation whose shareholders are limited to a small group of persons, often family members.