Respuesta :
Answer:
Accounting profit = $170,000
Economic profit = $-36,000
Explanation:
Here is the full question:
A year ago, you graduated from college and decided to open your own computer software company. Over the past year, your firm generated $500,000 in revenue. You hired two software engineers and paid each of them $150,000 over the past year. You also purchased computer equipment that cost a total of $30,000. To save money, you decided to use the basement of your house for the business. Previously, you had rented this space to a tenant for $6,000 per year. Instead of opening your own business, you could have gone to work for Microsoft and earned $200,000 over the past year. a. What were your accounting profits of your firm over the past year? 170000 b. What were the economic profits of your firm over the past year?
Accounting profit is total revenue less total cost or explicit cost.
Accounting profit = Revenue - total cost
Revenue = $500,000
Cost = ($150,000 × 2) + $30,000 = $330,000
Accounting profit = $500,000 - $330,000 = $170,000
Economic profit is accounting profit less implicit cost or opportunity cost.
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
The opportunity cost of using the basement is the $6,000 that could have been earned from renting it out.
The opportunity cost of starting a business is what would have been earned if he worked for Microsoft.
Opportunity cost = $200,000 + $6,000 = $206,000
Economic profit = $170,000 - $206,000 = $-36,000
I hope my answer helps you
