Ask Question
23 January, 00:56

Suppose an assistant professor of economics is earning a salary of $75,000 per year. One day she quits her job, sells $100,000 worth of bonds that had been earning 5 percent per year, and uses the funds to open a bookstore. At the end of the year, she shows an accounting profit of $90,000 on her income tax return. What is her economic profit?

+5
Answers (1)
  1. 23 January, 01:15
    0
    Economic profit $10,000

    Explanation:

    Income earned as an assistant professor = Salary + Interest on bonds = 75000 + 5% on 100,000 = 75000 + 5000

    Income earned as an assistant professor = $80,000

    Income from the bookstrore = $90,000

    In calculating economic profit, opportunity costs are deducted from revenues earned.

    Economic profit = $90,000 - $80,000 = $10,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Suppose an assistant professor of economics is earning a salary of $75,000 per year. One day she quits her job, sells $100,000 worth of ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers