Acme Inc. makes anvils at its factory in the southwest, Total revenues from sales of anvils are $1.000,000 per year. Acme pays its workers $200,000 per year (including taxes and benefits), buys $100,000 in iron and other manufacturing supplies, and owns its factory and does not need to make mortgage payments on it. It can however rent out the factory to Apex a company that makes fireworks for $50,000 a year. Wile E. Coyote owns Acme and runs it. He used to work as a Mechanical Engineer at an annual salary of $100.000. Acme's annual economic profits are: O 5700,000 because that is what you get when you subtract all opportunity costs from revenues. O $650.000 because the rent Acme could earn is also an opportunity cost for ACME O $700, 000 because economic profit incorporates only explicit costs. O $650,000 because that is what you get when you subtract implicit costs from revenues. O $550,000 because that is what you get when you subtract all the opportunity costs from revenues
Acme Inc. makes anvils at its factory in the southwest, Total revenues from sales of anvils are $1.000,000 per year. Acme pays its workers $200,000 per year (including taxes and benefits), buys $100,000 in iron and other manufacturing supplies, and owns its factory and does not need to make mortgage payments on it. It can however rent out the factory to Apex a company that makes fireworks for $50,000 a year. Wile E. Coyote owns Acme and runs it. He used to work as a Mechanical Engineer at an annual salary of $100.000. Acme's annual economic profits are: O 5700,000 because that is what you get when you subtract all opportunity costs from revenues. O $650.000 because the rent Acme could earn is also an opportunity cost for ACME O $700, 000 because economic profit incorporates only explicit costs. O $650,000 because that is what you get when you subtract implicit costs from revenues. O $550,000 because that is what you get when you subtract all the opportunity costs from revenues
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 63P
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