In August 2008, Ethan Nicholas Developed the IShoot Application for the Apple

question 9

Multiple Choice

In August 2008, Ethan Nicholas developed the iShoot application for the apple iPhone 3G, and within five months had earned $800,000 from this program. By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales. This example indicates that in a competitive market,

• A) earning an economic profit in the long run is extremely easy.
• B) earning an economic profit in the long run is extremely difficult.
• C) it is impossible to earn an economic profit in either the short run or the long run.
• D) economic profits are only earned in the long run.

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Definitions:

Payroll Tax Expense

Taxes that an employer pays related to the salaries and wages of employees, including social security tax, Medicare tax, and federal and state unemployment taxes.

Medical Insurance Deductions

Amounts deducted from an employee's paycheck to cover health insurance premiums, typically part of an employer's benefits package.

FICA Taxes Payable

Amounts owed by employers for their portion of Social Security and Medicare taxes, required to be remitted to the government.

Employer's Payroll Taxes

Employer's Payroll Taxes are taxes that employers are required to pay on behalf of their employees, which can include Social Security, Medicare, and unemployment taxes.