In a given year, a consulting firm has the following costs: $600,000 in wages and salaries paid to employees; $73,000 in rental payments for office space; and $82,000 for office supplies, advertising, and utilities. In addition, Caroline, the owner of the firm, works for the firm full time (and is not paid a salary, since she receives the firm's profits). If she did not work for the consulting firm, Caroline could earn $130,000 per year working as a consultant for another firm. For each possible amount of total revenue, fill in the accounting profit and economic profit of the advertising firm.

Total Revenue ($) Accounting Profit ($) Economic Profit ($)

750,000

800,000

850,000

900,000

Question

Connor Pope

Business

1 August, 10:20

In a given year, a consulting firm has the following costs: $600,000 in wages and salaries paid to employees; $73,000 in rental payments for office space; and $82,000 for office supplies, advertising, and utilities. In addition, Caroline, the owner of the firm, works for the firm full time (and is not paid a salary, since she receives the firm's profits). If she did not work for the consulting firm, Caroline could earn $130,000 per year working as a consultant for another firm. For each possible amount of total revenue, fill in the accounting profit and economic profit of the advertising firm.

Total Revenue ($) Accounting Profit ($) Economic Profit ($)

750,000

800,000

850,000

900,000

+1

Answers (1)

Know the Answer?

Harmony Weeks · Answer 1

750,000 - 5,000 - 125,000

800,000 45,000 - 75,000

850,000 95,000 - 25,000

900,000 145,000 15,000

Explanation:

600,000 wages

73,000 rent

82,000 supplies

operating cost 755,000

opportunity cost 130,000

accounting profit revenue - operating cost economic profit = accounting profit - opportunity cost