Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year.
To receive a normal profit, the firm described above would have to
|Experience $10,000 less in cost.|
|Receive $90,000 more in revenue.|
|Receive $10,000 more in revenue.|
|Do nothing since it already earns a normal profit.|