Question

Business at Korey’s Comics has been good, and Korey expects the same business next month. However, due to an increase in business, Korey has made the decision to bring on an extra hand to help run the store in the afternoons. The new employee will make $435 per month. How does this change affect Korey’s monthly net income?
a.
Korey’s monthly net income will be $435.
b.
Korey’s monthly net income will increase by $435.
c.
Korey’s monthly net income will decrease by $435.
d.
Korey’s monthly net income will not be affected by the change.


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

Korey’s net income will decrease by $435 per month because the new employee’s pay is an additional expense, reducing profit by that amount (assuming revenue is unchanged).