Until Recently,Rosemarie Worked as an Accountant,earning $30,000 Annually

question 165

Multiple Choice

Until recently,Rosemarie worked as an accountant,earning $30,000 annually.Then she inherited a piece of commercial real estate that had been renting for $12,000 annually.Rosemarie decided to leave her job and operate a Peruvian restaurant in the space she inherited.At the end of the first year,her books showed total revenues of $260,000 and total costs of $230,000 for food,utilities,cooks,and other supplies.Her economic profit at the end of one year is:

• A)$230,000.
• B)$30,000.
• C)$0.
• D)-$12,000.

---

Definitions:

Competitive Price-searcher Market

A market structure where firms set their own prices because products are differentiated, giving them some degree of pricing power.

Average Total Cost

The cost per unit produced, found by taking the total production costs and dividing it by the quantity of items produced.

Price-taker Firm

A firm that has no control over the market price and must accept the prevailing market price for its product or service.

Competitive Price-searcher Firm

A business that operates in a market where firms have some degree of control over the prices they charge, often because of product differentiation.