Classify the cost referenced in each scenario in terms of whether it is used to calculate economic profit only or both accountin
1 answer:
In 2018, Boeing paid its Washington state employees nearly $600 million in bonuses.----> both economic and accounting profits
In 2018, Amazon opened its new office building in downtown Seattle. Instead of using the new office space itself, Amazon could have rented out the space to local companies for $50,000 per floor per year.--->economic profits only
Nordstrom pays $50 per square foot to lease space in a shopping mall.--->both economic and accounting profits
Anna, the owner of a local bike repair shop, uses her time to operate her business instead of earning an annual salary of $100,000 at the Ford Motor Company.----> economic profits only
<h3>What are economic profits?</h3>Generally, The difference between the income obtained from the sale of a product and the costs of the inputs utilized, in addition to any opportunity costs, determines whether an economic activity results in a profit or loss.
When determining the level of economic profit, the amount of revenue received is subtracted from both the opportunity costs and the explicit expenses.
Read more about economic profits
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