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m_a_m_a [10]
3 years ago
5

Josephine quits her $40,000 a year job to start her own business. She rents an office for $15,000 a year, pays wages and salarie

s of $50,000 a year, utilities of $4,000 a year, and materials of $20,000. She uses her own car for sales work rather than leasing an equivalent car for $6000 a year. If revenues are $140,000, her accounting profit and economic profit are respectively.
a. $45,000 and $11,000.
b. $51,000 and $5000.
c. $45,000 and $5000
d. $51,000 and $45,000.
Business
1 answer:
Sliva [168]3 years ago
3 0

Answer:

b. $51,000 and $5000.

Explanation:

According to the scenario, computation of the given data are as follows,

Total Revenues = $140,000

Explicit cost = $15,000 + $50,000 + $4,000 + $20,000 = $89000

Implicit cost (opportunity cost) = $40,000 + $6,000 = $46,000

So, we can calculate accounting profit and economic profit by using following formula,

Accounting Profit = Total revenue - Explicit cost

By putting the value, we get

= $140,000 - $89,000

= $51,000

Economic Profit = Total revenue - Explicit cost - Implicit cost

By putting the value, we get

= $140,000 - $89,000 - $46,000

= $5,000

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The percentage of people eligible for job and not currently involved in paid work or self employed and available for work as well is called rate of unemployment. It is the percentage of people who is not currently woking seeking the job.

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Unemployment rate = ( 8 million / 32 million ) x 100 = 25%

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