A person starts her own business after quitting a job in which she made $75,000.

Question

A person starts her own business after quitting a job in which she made $75,000. Expenses include $175,000 for wages and salaries (including a salary of $100,000 for herself), $150,000 for materials and supplies, $20,000 for utilities, and $5000 for gasoline. She uses her own car in her work, for which she paid $16,000 two years earlier. She could rent a similar car for $5000 a year. If her revenues are $350,000, accounting profits and economic profits respectively are

a. -$16,000 and 0.

b. -$5,000 and $20,000.

c. 0 and 0

d. 0 and $20,000.

Explanation / Answer

Accounting profits and economic profits respectively are:

a. 0 and -$16,000.

*****

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.