how to find accounting and economic profit- please help!?
How can I calculate the accounting and economic profit for the following scenario? Suppose Kristen owns and operates a piano store. On average, her total revenue is $200,000, and her total costs are $150,000 annually. The market-clearing price for renting her facilities is $10,000, and she is aware that she could earn a salary of $45,000 per year working as an assistant manager at another company.
3 Answers
Well the accounting profit is simply the total revenue which is 200k, but economics profit is accounting profit minus costs or total revenue minus costs so 200-150-10=40k so her economic profit is 40k. If she were to work as an assitant manager she would be making more money because she doesn’t have any costs to pay so if i were her i would quit my job and work as an assistant manager.
Hope that helps 🙂
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how to find accounting and economic profit- please help!?
How do I solve the accounting and economic profit for the following:
Suppose Kristen owns and operates a piano store. On average her total revenur i $200k and her total costs are $150k yearly. The market clearing price for renting her facilities are $10k, and she knows for certain that she could…
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