The Following Is Cost Information for the Creamy Crisp Donut

question 74

Multiple Choice

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000
Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Creamy Crisp's economic profit is

• A) $150,000.
• B) $80,000.
• C) $230,000.
• D) $94,000.

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Definitions:

Null Hypothesis

A hypothesis that assumes no statistical significance exists in a set of given observations, typically asserting that no variation or effect is present.

Type I Error

The error that occurs when a true null hypothesis is incorrectly rejected.

Test Statistic

A value calculated from sample data used to make a decision whether to reject the null hypothesis in hypothesis testing.

Test Statistic

A value calculated from sample data during hypothesis testing, used to determine the probability of observing the sample data under the null hypothesis.