Mr. Sweet opened a candy store. He rented a building for $30,000 a year. During the first year of operation, Sweet paid $40,000 to his employees, $10,000 for utilities, and $20,000 for goods he bought from other firms. His total revenue was $135,000. Sweet's best alternative to running this candy store is to work for Wal-Mart as a sales associate for $15,000 a year. What is Sweet's economic profit?
A) $20,000
B) -$20,000
C) zero
D) $35,000

Question

Quizplus · Accepted Answer

Economic profit = Total revenue - (Total cost + Opportunity cost)= 135,000 - (30,000 + 40,000 + 10,000 + 20,000 + 15,000)= 135,000 - 115,000= $20,000

Mr Sweet Opened a Candy Store