Multiple Choice
Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's economic profit is equal to
A) -$16,000, that is, an economic loss of $16,000.
B) -$9,000, that is, an economic loss of $9,000.
C) +$9,000.
D) +$12,000.
Correct Answer:
Verified
Correct Answer:
Verified
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