Philip Owns and Operates a Gas Station

question 40

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 $800 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 $300 per week, the business's economic profits are

• A) -$100 per week.
• B) $200 per week.
• C) $0 per week.
• D) $700 per week.
• E) $1,000 per week.

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Definitions:

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Social Readjustment Rating Scale

A scale measuring the stress load individuals carry, based on major life changes.

Numerical Values

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A physical, chemical, or emotional factor that causes bodily or mental tension and may be a factor in disease causation.