# Calculation Of Economic Profit

Question

1. Suppose that Bob leaves a job that pays \$50,000 per year in order to open a new sponge business. His insurance cost is \$5,000, his material cost is \$25,000, his lease payments are \$10,000 and his sales revenue is \$90,000. Bob's economic profit is:

A) \$0.
B) \$40,000.
C) \$50,000.
D) \$90,000.

2. Using information from the figure, if price equals \$0.70, the firm should:

A) stay open because it is making an economic profit.
B) stay open in the short run, although it will earn negative profits.
C) stay open because it is making a normal profit.
D) shut down.

Summary

These multiple choice questions belong to Economics. The two questions are about finding out economic profit.

Total Word Count NA

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