Suppose that a business owns the land on which it factory sits and thus pays no

Question

Suppose that a business owns the land on which it factory sits and thus pays no one rent. The rental market value of the land is $200,000 per year. It pays $800,000 per year for labor and inputs and also pays $200,000 per year for insurance. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:

A. $200,000 and its economic profits were $400,000. B. zero and its economic loss was $200,000. C. $0 and its economic profits were $200,000. D. $200,000 and its economic profits were zero.

Explanation / Answer

Answer d , because the economic profits value is 0 . income meets expenditure

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