Answer:
Economic profit = -$25,000 option c
Opportunity cost = $175,000 option d
Accounting profit to allow for zero economic profit = $175,000 Option c
Explanation:
<em>Economic profit is the difference between revenue and implicit cost. Implicit cost is the sum of out-of-pocket accounting cost and opportunity cost.</em>
<em>opportunity csot is the value of the benefit sacrificed in favour of a decision.</em>
Economic profit = Accounting profit - opportunity cost
Opportunity cost for victor includes
1. The $100,000 per year which he would have earned had he invested the money in a bond
2. The annual salary of $75000 he forfeited
Total opportunity cost = 100,000 + 75,000= $175,000
Economic profit = 150,000 -175,000 = -$25,000
To attain an economic profit of zero , the accounting profit ought to be the same at the opprotunity cost of $175,000
Economic profit = -$25,000 option c
Opportunity cost = $175,000 option d
Accounting profit to allow for zero economic profit = $175,000 Option c
