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Question
Karolina owns a small diner, where she works full-time in the kitchen. Her total revenue last year was $100,000, and her rent was $3,000 per month. She pays her one employee $2,000 per month, and the cost of ingredients and overhead averages $500 per month. Karolina could earn $35,000 per year as the manager of a competing diner nearby. Her total economic profit last year was
a. $34,000.
b. -$1,000.
c. $20,000.
d. $65,000.
e. -$35,000.
Answer
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