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arsen [322]
3 years ago
6

Mike used to work as a commercial painter for $40,000 per year but quit in order to start his own painting business. To invest i

n his painting business, he withdrew $20,000 from his savings, which paid 3% interest, and borrowed $30,000 from his uncle whom he pays 3% interest per year. Last year Mike paid $25,000 for supplies and had a revenue of $60,000. How would and accountant and an economist calculate Mike's costs?
Business
1 answer:
N76 [4]3 years ago
7 0

Answer:

Accountant   34,100 gain

Economist      (6,500) loss

Explanation:

<u></u>

<u>Accountant:</u>

revenue               60,000

operating cost    25,000

Interest expense     900   ( 30,000 x 3%)

net income          34,100

<u>Economist: </u>

revenue     60,000

explicit cost 25,900

<em>implicit cost (opportunity cost):</em>

savings yield:

20,000 x 3% = 600

painter job   40,000

economic loss (6,500)

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