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\begin{tabular}{l} A company makes \( \$ 200,000 \) in a year and has \( \$ 150,000 \) in production costs, leaving them with \( \$ 50,000 \). The \( \$ 200,000 \) \\ represents \\ \( \begin{array}{l}\text { opportunity costs } \\ \text { revenue } \\ \text { profit } \\ \text { resource costs }\end{array} \) \\ \hline\end{tabular}

Ask by Olson Wright. in the United States
Mar 06,2025

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The \$200,000 represents Revenue.

Solution

To solve the problem, we need to identify what the \( \$ 200,000 \) represents in the context of the company's financials. Let's break down the information provided: 1. **Total Revenue**: The company makes \( \$ 200,000 \) in a year. This amount is the total income generated from sales or services before any costs are deducted. 2. **Production Costs**: The company incurs \( \$ 150,000 \) in production costs. This is the total expense related to producing goods or services. 3. **Profit**: After deducting the production costs from the total revenue, the company is left with \( \$ 50,000 \). This amount is the profit, which is calculated as: \[ \text{Profit} = \text{Total Revenue} - \text{Production Costs} = 200,000 - 150,000 = 50,000 \] Now, we need to determine what the \( \$ 200,000 \) represents from the options given: - **Opportunity Costs**: This refers to the potential benefits that are missed when choosing one alternative over another. It is not directly represented by the total revenue. - **Revenue**: This is the total income generated from sales or services, which is exactly what \( \$ 200,000 \) represents. - **Profit**: This is the amount left after all costs are deducted, which is \( \$ 50,000 \) in this case. - **Resource Costs**: This typically refers to the costs associated with the resources used in production, which is \( \$ 150,000 \) here. Based on this analysis, the \( \$ 200,000 \) represents **Revenue**. Thus, the answer is: \[ \text{The } \$ 200,000 \text{ represents Revenue.} \]

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Bonus Knowledge

The \( \$ 200,000 \) represents revenue, which is the total income generated from sales before any costs or expenses are deducted. This figure is essential for understanding a company's earning potential and is typically the first number that business managers analyze for financial performance. In real-world application, understanding the distinction between revenue and profit is crucial. While revenue tells you how much money comes in, profit reveals how much of that revenue is actually retained after expenses are paid. This knowledge helps businesses make informed decisions about investments, budgeting, and scaling operations effectively.

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