Question

Jamal quits a job that was paying him $30,000 per year and decides to start his own business. He runs his business out of his house in a room he had been renting to his colleague for $12,000 a year. Jamal withdraws the $20,000 in his savings account that had been earning him a 10 percent annual interest to purchase computers and related accessories and equipment for the business. During the first year of operation, Jamal’s business incurred $30,000 in explicit costs and generated $60,000 in total sales. Jamal’s economic profit is

Answer 1

Based on the information given, it should be noted that the economic profit generated will be $14000.

Economic profit is simply calculated as:

Total revenue - Implicit cost - Explicit cost.

= 60000 - 44000 - 30000

= 14000

Implicit cost was calculated as:

= 30000 + 12000 + 2000

= 44000

In conclusion, the correct option is $14000.

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Answer 2

Answer:

it will be 60,000 in total profit

Explanation:he started with 30,000-12,000=18,000+20000+2000 from the 10 percent annual interest which will equal 30,000 in total minus the 30,000 for the cost of in equiment it will be 60,000 in total profit