Refer to Scenario 9.5. The restaurant's weekly economic profit is

A) positive.
B) negative.
C) zero.
D) break-even.

Question

Refer to Scenario 9.5. The restaurant's weekly economic profit isA)  positive.B)  negative.C)  zero.D)  break-even.

Selena Smith · Accepted Answer

Final Answer : B, Explanation :  The restaurant's weekly revenue is $2,700 (900 meals x $3). Total weekly costs are $2,200 ($1,000 fixed costs + $1,000 wages + $600 materials). The economic profit is $2,700 - $2,200 = $500. However, the fixed costs include the 10% return to investors, which is $1,000 per week ($520,000 x 10% / 52 weeks), making the total weekly costs $3,200. Therefore, the economic profit is negative ($2,700 - $3,200 = -$500).

Refer to Scenario 9.5. The restaurant's weekly economic profit is

A) positive.
B) negative.
C) zero.
D) break-even.

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Learning Objectives

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