Question

Until recently, Rosemarie worked as an accountant, earning $30,000 annually. Then she inherited a piece of commercial real estate that had been renting for $12,000 annually. Rosemarie decided to leave her job and operate a Peruvian restaurant in the space she inherited. At the end of the first year, her books showed total revenues of $260,000 and total costs of $230,000 for food, utilities, cooks, and other supplies. Her economic profit at the end of one year is:

Answer 1

Answer:

-$12,000

Explanation:

Given that

Annually earning = $30,000

Renting annually = $12,000

Total revenue = $260,000

Total cost = $230,000

The computation of economic profit is shown below:-

Economic profit = Total revenue - Total cost - Annually earning - Renting earning - Renting annually

= 260,000 - 230,000 - 30,000 - 12,000

= -$12,000