Scarlett Recently Began Running Her Husband's Lumber Mill

Scarlett recently began running her husband's lumber mill. Last month she took in $5000 in sales revenue and paid $3400 in out-of-pocket costs. Did the lumberyard make an economic profit last month?

A) Yes. After factoring implicit costs, her profit exceeds $1600.
B) Yes. After considering nonzero explicit and implicit costs, her profit is equal to $1600.
C) No, the lumberyard did not make an economic profit.
D) Without knowing the magnitude of implicit costs, it is not possible to state whether the lumberyard earned an economic profit last month.

Correct Answer:

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