Question

Andrew left his role as an economist at the U.S Postal Service where he made $170,000 per year to start his own private economic consulting company. During his first year of private consulting, he made $35,000 in economic profit. If Andrew's clients paid him a total of $400,000 for his consulting services, then what must Andrew's accounting profit be?

Answer 1

Andrew's accounting profit is $205,000.

Step-by-step explanation:

Earnings of Andrew when he worked as an economist: $170,000 per year

Earnings made in his first year of private consulting: $35,000

Total amount received for consulting services: $400,000

Andrew’s accounting profit = $170,000 + $35,000

 Andrew’s accounting profit = $205,000