Fred Is Considering Opening a Ski Shop in Colorado

question 26

Multiple Choice

Fred is considering opening a ski shop in Colorado.Assume Fred will incur the following costs: building rent = $100,000/year,inventory = $250,000/year,energy = $50,000/year,and labor (one clerk) = $10,000/year.In addition,Fred's current income as a computer programmer is $40,000 per year.Assuming Fred would earn $460,000 in revenues,he could expect to earn:

• A)an accounting profit of $10,000 per year.
• B)an accounting profit of $60,000 per year.
• C)an economic profit of $10,000 per year.
• D)an economic profit of $50,000 per year.

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Definitions:

Guilds

Associations of artisans or merchants who control the practice of their craft in a particular town, historically important in the Middle Ages.

Domestic Networks

Systems or structures within a country that connect individuals and entities for various purposes, such as communication, transportation, or support.

Hundred Years' War

A prolonged series of conflicts from 1337 to 1453 between England and France, marked by several periods of warfare and truces.