Suppose That a Local Hardware Store Has Explicit Costs of $2

question 78

Multiple Choice

Suppose that a local hardware store has explicit costs of $2 million per year and implicit costs of $44 000 per year.If the store earned an economic profit of $50 000 last year,this means that the store's accounting profit equalled:

• A) $94 000.
• B) $6 000.
• C) $2.05 million.
• D) $2.044 million.

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Definitions:

Cash Balance

The total amount of cash or cash equivalents a company or individual holds at any given time.

Merchandising Firm

A business that purchases finished goods for the purpose of resale to consumers without altering the condition of the goods.

Merchandise Inventory

Goods or products that a company holds with the intention of selling them to customers as part of its business operations.

Selling Expenses

Costs incurred directly and indirectly from selling a product or service, including sales commissions, advertising, promotional materials, and the salaries of sales staff.