A business owner makes 1,000 items a
day. Each day she contributes eight hours
to produce those items. If hired, elsewhere
she could have earned $250 an hour. The
item sells for $15 each. Production does
not stop during weekends. If the explicit
costs total $150,000 for 30 days, the firm’s
accounting profit for the month equals
a. $300,000.
b. $60,000.
c. $450,000.
d. $240,000.
. If a firm is earning negative economic
profits, it implies
a. that the firm’s accounting profits are zero.
b. that the firm’s accounting profits are
positive.
c. that the firm’s accounting profits are
negative.
d. that more information is needed to
determine accounting profits.