You borrow $10,000 at an interest rate of 5% to open a snow cone stand.You will earn an economic profit if

Question

Quizplus · Accepted Answer

Economic profit occurs when the return on investment exceeds all costs, including the opportunity cost of capital. In this case, earning more than the 5% interest rate on the borrowed $10,000 means the investment is generating more than the cost of borrowing, leading to an economic profit.

You Borrow $10,000 at an Interest Rate of 5% to Open