Laura's Pizza Place Incurs $800,000 Per Year in Explicit Costs

question 51

Multiple Choice

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

• A)$200,000
• B)$400,000
• C)$500,000
• D)$2.8 million

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Definitions:

Consignment

An arrangement where goods are placed in the care of another, but ownership remains with the supplier until the goods are sold.

Bailor

An individual who entrusts their property into the care of another (the bailee).

Bailment

The legal relationship arising when one person (the bailor) gives possession of an object to another person (the bailee) under the agreement that it will be returned or otherwise disposed of according to the direction of the bailor.