Asked by Ahmed Aldughaither on Jun 03, 2024
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The sole proprietor of the Milwaukee Machine Company receives all accounting profits earned by her firm. She has a standing salary offer of $32,000 a year to work for a large corporation. If she had invested her capital outside her own company, she estimates that would have returned $15,000 this year. If accounting profits for the year were $55,000, then her economic profits were (based solely on the given figures)
A) $102,000.
B) $8,000.
C) $47,000.
D) $-23,000.
Accounting Profits
The total revenue of a business minus the explicit costs; it is the net income reported on the financial statement.
Economic Profits
The difference between total revenue and total costs, including both explicit and implicit costs.
Salary Offer
The amount of money proposed to be paid to an employee for their services, typically expressed as an annual sum or hourly wage.
- Compute the overall economic charges for a firm, encompassing both explicit and implicit expenses.
- Distinguish between the concepts of accounting profit and economic profit.
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Learning Objectives
- Compute the overall economic charges for a firm, encompassing both explicit and implicit expenses.
- Distinguish between the concepts of accounting profit and economic profit.
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