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Sveta_85 [38]
3 years ago
13

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own bus

iness, she withdrew $20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?a. $-56,000.b. $-6,000.c. $4,000.d. $19,000.
Business
1 answer:
Ira Lisetskai [31]3 years ago
3 0

Answer:

C) $4,000

Explanation:

To calculate economic profit we can use the following formula:

economic profit = total revenue - (accounting costs + implicit costs) = (total revenue - accounting cost) - implicit costs

where:

  • accounting profit = total revenue - accounting cost = $50,000
  • implicit costs: ($20,000 x 5%) + $45,000 = $1,000 + $45,000 = $46,000

economic profit = $50,000 - $46,000 = $4,000

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