Question content area top Part 1 Lucinda starts a business consulting company. She makes all the business decisions and bears the risk of running the business. What does Lucinda expect to receive? Question content area bottom Part 1 Lucinda expects to receive _______. A. normal profit B. revenue greater than her implicit cost C. revenue greater than the capital investment D. revenue greater than her explicit cost
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She is starting a consulting company, making all the decisions, and bearing the risks associated with running the business. Show more…
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Assume that you own a sole proprietorship. Your first-year earnings were $75,000, and your explicit costs were $55,000. If you could have worked at another establishment and earned $25,000, which of the following is true? a. Your firm earned an economic profit of $20,000 b. Your firm's total implicit costs were $80,000 c. Your firm sustained an economic loss of $5,000 d. Your firm's total costs are $100,000
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During a year of operation, a firm collects $175,000 in revenue and spends $80,000 on raw materials, labor expenses, utilities, and rent. The owners of the firm have provided $500,000 of their own money to the firm instead of investing the money and earning a 14 percent annual rate of return. a) The explicit costs of the firm are $80,000. The implicit costs are $70,000. Total economic cost is $150,000. b) The firm earns an economic profit of $25,000. c) The firm's accounting profit is $95,000. d) If the owners could earn 20 percent annually on the money they have invested in the firm, the economic profit of the firm would be $55,000 (when revenue is $175,000).
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