Help Corinne is offered a job with a salary of $70,000, which she turns down to start her own business. She uses$20,000 of her own savings to help start the business, savings that had been providing her a return of $1,000per year. Over her first year in business, Corinne collects total revenue of $180,000 and must cover explicitcosts of $105,000. During her first year in business, Corinne's accounting profit isand her economicprofit isO $110,000; $4,000O $75,000; $4,000O $75,000; -$16,000O $110,000; –$16,000 An income Gini coefficient of zero means thatthere is zero povertyO the market is perfectly competitivethere is no deadweight lossone person earns all the incomeeveryone earns the same income

The economic profit accounts for the implicit and explicit costs that are incurred by the individual while the accounting profit only accounts for the actual explicit costs incurred by the individual, such as fixed costs and variable costs. Part 1 Option B is correct. The accounting profit is equal to $75,000 as we only subtract the explicit costs from the revenue. The economic profit is equal to $4000 as we subtract the value that would have been earned from her other job and the savings that she could have earned by not starting her business. The total value of her savings is not included as that counts towards investment in the business. Option A is incorrect. The accounting profit is $75,000, and the economic profit is $4000. Option C is incorrect. The accounting profit is $75,000, and the economic profit is $4000. Option D is incorrect. The accounting profit is $75,000, and the economic profit is $4000. Part 2 Option 5 is correct. The Gini Coefficient can measure inequality in the country. When it takes the value of 1, it signifies perfect inequality as one person will earn all the income. When it takes a value of 0, it signifies perfect equality, and thus it means that everyone earns the same income. Option 1 is incorrect. The Gini Coefficient can measure inequality, not poverty. Option 2 is incorrect. The Gini Coefficient can measure inequality, not market competitiveness. Option 3 is incorrect. The Gini Coefficient can measure inequality, not socially optimal. Option 4 is incorrect. The Gini Coefficient can measure inequality if one person earns all the income, the Gini coefficient will take the value 1.The Gini Coefficient can measure inequality as it allows us to judge the level of income distribution in the economy. All countries will aim for a lower score as this signifies a higher degree of equality.