Suppose That a Business Incurred Implicit Costs of $200,000 and Explicit

question 135

Multiple Choice

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year.If the firm sold 4,000 units of its output at $300 per unit,its accounting profits were:

• A) $100,000 and its economic profits were zero.
• B) $200,000 and its economic profits were zero.
• C) $100,000 and its economic profits were $100,000.
• D) zero and its economic loss was $200,000.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage.

Note Duration

The length of time until a note payable or receivable is due to be paid or received.

Promissory Note

A monetary tool that involves a formal commitment from one entity to give a specific amount of cash to another, either when asked or at an agreed-upon date in the future.

Face Value

The nominal or original value of a security or financial instrument as stated by its issuer, often the amount to be repaid at maturity.