Jacqui decides to open her own business and earns $90,000 in accounting profit the first year. When deciding to open her own business, she withdrew $20,000 from her savings, which earned 3 percent interest. She also 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

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-10-27T10:38:47+02:00

Jacqui's economic profit from running her own business is: $44,400

Using this formula

Economic profit =(Accounting costs - Implicit costs)

Where:

Accounting profit = $90,000

Implicit costs=($20,000 x 3%) + $45,000

Let plug in the formula

Economic profit=$90,000-[($20,000 x 3%) + $45,000]

Economic profit=$90,000-($600+$45,000)

Economic profit=$90,000-$45,600

Economic profit=$44,400

Inconclusion Jacqui's economic profit from running her own business is: $44,400

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