The table below provides the annual revenues and costs for a family- owned firm producing catered meals.

\begin{array}{|l|l|}\hline \text { Total Revenues }(\$) & 500000 \\\hline & \\\hline \text { Total Costs }(\$) & \\\hline \text { wages and salaries } & 200000 \\\hline \text { risk-free return of } 6 \% \text { on owners' capital of } 250000 & 15000 \\\hline \text { rent } & 105000 \\\hline \text { depreciation of capital equipment } & 25000 \\\hline \text { risk premium of } 8 \% \text { on owners' capital of } 250000 & 20000 \\\hline \text { intermediate inputs } & 150000 \\\hline \text { forgone wages of owners in alternative employment } & 80000 \\\hline \text { interest on bank loan } & 10000 \\\hline\end{array}

TABLE 7- 1
-Refer to Table 7- 1.To an accountant,this family- owned catering company is earning .To an economist,the same firm is earning _ .
A)zero profit; normal profits
B)positive profits; economic losses
C)economic profits; economic profits
D)economic profits; economic losses
E)zero profit; economic losses

A Firm That Is Maximizing Its Profits by Producing a Certain

Multiple Choice

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