If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm’s economic profits equal?
A. 6% of output
B. 10% of output
C. 12% of output
D. 8% of output
Answer:C
If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm’s economic profits equal?
A. 6% of output B. 10% of output C. 12% of output D. 8% of output
Explanation: 61. Neil’s Bakery is famous for its giant cinnamon buns. The bakery has fixed costs of $100. Neil must pay each worker a wage of $10.00 per hour and each works an 8 hour shift. He earns $2 for each cinnamon bun that is sold. The following table shows how many cinnamon buns he can sell, depending on the number of workers he hires. Refer to the table below. To maximize his profits in this competitive market, how many workers should he hire?