Scarlett recently began running her husband's lumber mill.Last month she took in $5,000 in sales revenue and paid $3,400 in out-of-pocket costs.Did the lumberyard make an economic profit last month?

Question

Quizplus · Accepted Answer

The question does not provide information about implicit costs, which are necessary to determine whether the lumberyard made an economic profit. Without knowing the magnitude of implicit costs, it is not possible to state whether the lumberyard earned an economic profit last month. Option B cannot be correct as it assumes that implicit costs are zero. Option D is also not correct since there is no information provided to suggest that implicit costs would increase profit above $1,600.

Scarlett Recently Began Running Her Husband's Lumber Mill