Final answer:
Economic profit is calculated by subtracting the opportunity costs from the accounting profit. In this case, the opportunity cost is the $30,000 of potential rental income the firm foregoes by using the land for its own factory.
Step-by-step explanation:
The question pertains to the calculation of economic profit for a firm that owns a factory situated on land which could generate rental income. To determine economic profit, one needs to consider both explicit and implicit costs, including opportunity costs. In this case, the opportunity cost is the $30,000 per year that the firm could earn if it rented out the land instead of using it for its factory. If we assume from Exercise 7.1 that the accounting profit has been calculated, we then subtract the opportunity cost of the land to determine the economic profit. Without additional financial details from Exercise 7.1, we can't provide a numerical answer, but the formula would be:
Economic Profit = Accounting Profit - Opportunity Costs
In this instance, the Opportunity Costs would include the $30,000 potential rental income foregone. Therefore, the economic profit last year would be the accounting profit minus $30,000.