Answer:
A. Madeline's accounting cost is $75,000
B. Madeline's economic cost is $100,000
C. Madeline's accounting profit is $75,000
D. Madeline's economic profit is is $50,000
Explanation:
A. To calculate Madeline's accounting cost we would have to make the following calculation:
Madeline's accounting cost=cost of supplies+rent+labour costs
Madeline's accounting cost=$50,000+$10,000+$15,000
Madeline's accounting cost=$75,000
B. To calculate Madeline's economic cost we would have to make the following calculation:
Madeline's economic cost=explicit cost+implicit cost
=$75,000+opportunity cost
=$75,000+0.10*$50,000+earning job
=$75,000+$5,000+$20,000
=$100,000
C. To calculate Madeline's accounting profit we would have to make the following calculation:
Madeline's accounting profit=revenue-accounting cost
=$150,000-$75,000
=$75,000
D. To calculate Madeline's economic profit we would have to make the following calculation:
Madeline's economic profit=revenue-economic profits
=$150,000-$100,000
=$50,000
