Suppose That a Small Business Takes in Monthly Revenue of $100,000

question 150

Multiple Choice

Suppose that a small business takes in monthly revenue of $100,000. Labor, rental, energy, and other purchased input costs are $70,000. The owner/entrepreneur could earn $5,000 per month in another job, and the owner/entrepreneur could get a return of $5,000 each month if she sold her business and invested the net proceeds in a financial asset, such as a treasury bond. Which of the following correctly describes her monthly economic profit?

• A) $100,000.
• B) $90,000.
• C) $70,000.
• D) $30,000.
• E) $20,000.

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Definitions:

Mutually Exclusive

Situations or options that cannot occur or be chosen at the same time.

Projects

Specific tasks or programs undertaken to achieve a goal, often with a defined scope, timeline, and resources.

Average Accounting Return

A financial metric that calculates the average profits earned on investments relative to the book value of assets over a certain period.