Pat Used to Work as an Aerobics Instructor at the Local

question 68

Multiple Choice

Pat used to work as an aerobics instructor at the local gym earning $35,000 a year.Pat quit that job and started working as a personal trainer.Pat makes $50,000 in total annual revenue.Pat's only out-of-pocket costs are $12,000 per year for rent and utilities,$1,000 per year for advertising and $3,000 per year for equipment.
Refer to the information given above.Pat's accounting profit is _______,and Pat's economic profit is _______.

• A)$50,000;$15,000
• B)$34,000;-$1,000
• C)$34,000;$15,000
• D)-$1,000;-$1,000

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Definitions:

Scratch-and-Save

A promotional discount method where customers scratch a card to reveal a discount or prize.

Profit

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Rate of Markdown

The percentage decrease from the original price to the sale price.

Operating Expenses

Costs associated with the day-to-day operations of a business or organization.