Philip Owns and Operates a Gas Station

question 43

Multiple Choice

Philip owns and operates a gas station. Philip works 40 hours a week managing the station but doesn't draw a salary. He could earn $700 a week doing the same work for Terrance. The station owes the bank $100,000 and Philip has invested $100,000 of his own money. If Philip's accounting profits are $1,000 per week while the interest on his bank debt is $400 per week, the business's economic profits are

• A) $0 per week.
• B) -$100 per week.
• C) $600 per week.
• D) $300 per week.
• E) $1,000 per week.

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