Asked by Abder-rahmane Cisse on Jul 11, 2024
Verified
Refer to Scenario 7.1. A yearly normal return for your computer software firm would be
A) $20,000.
B) $40,000.
C) $60,000.
D) $100,000.
Normal Return
The typical profit that is expected from a standard investment or business activity, accounting for the cost of capital.
Computer Software
Programs and operating information used by a computer to perform specific tasks.
Total Revenue
The total income received by a firm from the sale of its goods or services before any costs or expenses are deducted.
- Familiarize oneself with the concept of economic outlays, involving explicit and implicit costs.
- Identify the normal rate of return and its importance in economic profit calculations.
Verified Answer
JG
Jonathon GatlinJul 18, 2024
Final Answer :
B
Explanation :
A normal return is the minimum profit necessary to keep a firm's resources in their current use, essentially what the entrepreneur could earn in their next best alternative. In this scenario, the owner could have earned $40,000 a year by investing their capital elsewhere, making $40,000 the normal return for the business.
Learning Objectives
- Familiarize oneself with the concept of economic outlays, involving explicit and implicit costs.
- Identify the normal rate of return and its importance in economic profit calculations.