The Following Is Cost Information for the Creamy Crisp Donut

question 148

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
Refer to the data.If,other things equal,Creamy Crisp's revenue fell to $286,000:

• A) its implicit costs,including a normal profit,would exceed its explicit costs.
• B) it would earn a normal profit but not an economic profit.
• C) it would suffer an economic loss.
• D) its accounting profit would fall to zero.

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Definitions:

Private Enterprise

Business operations and ownership by private individuals rather than by the government, encouraging competition and innovation.

Communism

A political and economic ideology advocating for a classless society where all property is publicly owned and each person works and is paid according to their abilities and needs.

Societal Benefit

The total advantage or gain that society receives from an action, policy, or service, often considered in economic, social, or environmental terms.

Soviet Farmland

Agricultural land in the former Soviet Union, which faced challenges like collectivization and productivity issues.