Terry and jim are both involved in operating illegal businesses. terry operates a gambling business and jim operates a drug running business. both businesses have gross revenues of $500,000. the businesses incur the following expenses.
terry

jim

employee salaries

$200,000

$200,000

bribes to police

25,000

25,000

rent and utilities

50,000

50,000

cost of goods sold

–0–

125,000

which of the following statements is correct and why (1-3 sentence justification)?

a.

neither terry nor jim can deduct any of the above items in calculating the business profit.

b.

terry should report profit from his business of $250,000.

c.

jim should report profit from his business of $500,000.

d.

jim should report profit from his business of $250,000.

e.

none of the above.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

answer; read and consider the content of the items;