Consider the revenues and costs in 2013 for an? Alberta-based furniture company entirely owned by Mr. Harold Buford.
1) Suppose Mr. Buford has ?$425,000 of capital invested in Spruce Decor. Also suppose that equally risky enterprises earn an 18% rate of return on capital. What is the opportunity cost for Mr.? Buford's ?capital?
2) What are the economic profits for Spruce Decor in? 2013?
3) If this companys economic profits were typical of furniture makers in? 2013, what would you expect to happen in this? industry?
A) Entry would occur because economic profits are nagative
B) Exit would occur because economic costs exceed accounting costs
C) Exit would occur because economic profit is less than accounting profit
D) Exit would occur because economic profits are negative