Question

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting S50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are
a. $100, and her economic profits are $25
b. $100, and her economic profits are $75.
c. S25, and her economic profits are $100
d. $75, and her economic profits are $125

Answer 1

Answer:

a. $100, and her economic profits are $25 

Explanation:

Accounting profit = Revenue - Explicit Cost

$150 - $50 = $100

Economic profit = Accounting profit - Opportunity cost

$100 - ($ 15 × 5)

$100 - $75 = $25

I hope my answer helps you