10. The Costs of Production
Revenue, Cost, and Profit
Multiple Choice
Multiple ChoiceSweetie Nick has dreamt of owning a candy store his whole life. Unfortunately, after a few wrong turns, Sweetie Nick finds himself stuck in a job he hates, earning a nice salary of $100,000, but he is completely dead inside. One day, Sweetie Nick is fed up and decides to quit his job and open a candy store. He takes his $300,000 savings, which were earning 5% interest, and buys a property downtown. In his first year, Sweetie Nick sells $220,000 worth of candy that he purchased for $80,000. He also paid utilities of $2,000 and hired a cashier that earned $16,000 throughout the year. What is Sweetie Nick's accounting profit and economic profit?
A
Accounting profit = -178,000 ; Economic Profit = -278,000
B
Accounting profit = 122,000; Economic Profit = 7,000
C
Accounting profit = 122,000; Economic Profit = 22,000
D
Accounting profit = 22,000; Economic Profit = 0
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