Suppose Ben Buys Out Jerry's Ownership in a Firm but Retains

question 47

Multiple Choice

Suppose Ben buys out Jerry's ownership in a firm but retains him as a salaried employee.Jerry gets a salary equal to the value of the share that he held in the firm.In this case,which of the following statements is true?

• A)The firm's economic profit increases.
• B)The firm's economic profit decreases.
• C)There is no change in the economic profit of the firm.
• D)There is no change in the accounting profit of the firm.
• E)The firm's accounting profit increases.

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Definitions:

Deliberate Practice

A highly structured activity engaged in with the specific goal of improving performance.

Procedural Memories

A type of long-term memory that involves the retention of skills and procedures which are performed automatically, without conscious thought.

Semantic Memory

pertains to a portion of long-term memory that processes ideas and concepts not drawn from personal experience, including knowledge of facts and general information.

Great Lakes

A group of five large, interconnected freshwater lakes located on the border between the United States and Canada, known as Superior, Michigan, Huron, Erie, and Ontario.