Table 1-1 Lydia Runs a Small Nail Salon in the in the Town

question 109

Multiple Choice

Table 1-1
Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.
-Refer to Table 1-1. Using marginal analysis, how many hours should Lydia extend her nail salon's hours of operations?

• A) 2 hours
• B) 3 hours
• C) 4 hours
• D) 5 hours
• E) 6 hours

---

Definitions:

Indirect Method

The indirect method is an approach to calculating cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Operating Activities

Transactions and other events related to the primary business activities of an entity, such as sales and service provision.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from revenue.

Comparative Balance Sheets

Financial statements that present the financial position of a business at different points in time, side by side, to facilitate comparison.