Raj opens up a lemonade stand for two hours. He spends $10 for ingredients and s
ID: 1128393 • Letter: R
Question
Raj opens up a lemonade stand for two hours. He spends $10 for ingredients and sells $50 worth of lemonade. In the same two hours, he could have mowed multiple lawns for a total of $50. Raj has an accounting profit of __________ and an economic profit of __________.
Raj should mow lawns instead of sell lemonade.
Raj should sell lemonade and not mow lawns.
Raj is just as well off selling lemonade or mowing lawns.
Raj should not sell lemonade or mow lawns.
Raj should mow lawns instead of sell lemonade.
Raj should sell lemonade and not mow lawns.
Raj is just as well off selling lemonade or mowing lawns.
Raj should not sell lemonade or mow lawns.
Explanation / Answer
Answer
Accounting profit=revenue-explicit cost
=50-10=$40
economic profit=accounting profit-opportunity cost
=40-50
=-10
------------
Raj should mow lawns instead of sell lemonade.
because he will earn more by doing mow lawns.
Raj should mow lawns instead of sell lemonade.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.