Question

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000 and $45,000. What is Jacqui's economic profit from running her own business?A) $5,000B) -$5,000C) $20,000D) -$55,000

Answer 1

A) $5,000

Step-by-step explanation:

Given that she turned down three separate job offers with annual salaries of $30,000, $40,000 and $45,000 and earned $50,000 in accounting profit in the first year from her business.

The most likely option she would have opted for in place of her own business would have been the job offer of $45,000.

As such, Jacqui's economic profit from running her own business

= $50,000 - $45,000

= $5,000

Answer 2

A. $5,000

Step-by-step explanation:

Economic profit = Accounting profit - Implicit cost.

= $50000 - $45000

= $ 5,000

Therefore, Jacqui;s economic profit from running her own business is $ 5,000.