Asked by
Marques Chaleunphonh
on Dec 01, 2024
Verified
Philip owns and operates a gas station.Philip works 40 hours a week managing the station but doesn't draw a salary.He could earn $700 a week doing the same work for Terrance.The station owes the bank $100,000 and Philip has invested $100,000 of his own money.If Philip's accounting profits are $1,000 per week while the interest on his bank debt is $400 per week, the business's economic profits are
A) $0 per week.
B) -$100 per week.
C) $600 per week.
D) $300 per week.
E) $1,000 per week.
Opportunity Cost
The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on.
Accounting Profits
The total revenue of a company minus the explicit costs, not including opportunity costs, showing the financial performance.
Economic Profits
The difference between total revenue and total costs, including both explicit and implicit costs.
- Grasp the notion of elevating profit levels across various business instances.
- Comprehend the concept of economic profit versus accounting profit.
Verified Answer
KG
Learning Objectives
- Grasp the notion of elevating profit levels across various business instances.
- Comprehend the concept of economic profit versus accounting profit.