Final answer:
The question is about calculating a company's profit after deducting expenses such as labor, capital, and materials. In the provided example, a firm with sales revenue of $1 million and expenses totaling $950,000 would have an accounting profit of $50,000.
Step-by-step explanation:
The student's question revolves around calculating the profit a company made after paving a driveway and factoring in expenses. The same principle is applied when dealing with a company's accounting profit, which can be defined as the difference between total revenue and total expenses such as labor, capital, and materials.
Using the provided example, if a firm had sales revenue of $1 million last year, and it spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, then the accounting profit would be calculated as follows:
Accounting Profit = Sales Revenue - (Labor Costs + Capital Costs + Material Costs)
Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000)
Accounting Profit = $1,000,000 - $950,000
Accounting Profit = $50,000
Therefore, the firm's accounting profit would be $50,000.