Christopher Owns and Manages a Small Tea Shop

question 533

Multiple Choice

Christopher owns and manages a small tea shop. We assume that Christopher
(i) does not directly care about the quantity of tea that he sells.
(ii) does not directly care about the number of workers that he hires.
(iii) wants to maximize the quantity of tea that he sells.
(iv) wants to minimize the number of workers that he hires.
(v) wants to maximize profits.

• A)(i) and (ii) only
• B)(i), (ii), and (v) only
• C)(iii) and (iv) only
• D)(iii), (iv), and (v) only

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Definitions:

Balance Sheet

A report detailing a firm's assets, liabilities, and owners' equity at a particular moment.

Order of Magnitude

A classification of scale or size of a quantity, where each class is ten times greater or smaller than the one before.

Gross Method

An accounting practice where purchases are recorded at the total invoice cost without deducting any purchase discounts.

Net Method

An accounting approach where discounts for early payment are assumed to be taken and thus are deducted from the cost of purchases.