Suppose a farmer in Georgia begins to grow peaches. He uses $1,000,000 in savings to purchase land, he rents equipment for $50,000 a year, and he pays workers $100,000 in wages. In return, he produces 250,000 baskets of peaches per year, which sell for $4.00 each. Suppose the interest rate on savings is 3 percent and that the farmer could otherwise have earned $45,000 as a shoe salesman. What is the farmer's economic profit? The peach farmer earns economic profit of $ (Enter your response as an integer.) What is the farmer's accounting profit? The peach farmer earns accounting profit of $. (Enter your response as an integer.)

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Suppose a farmer in Georgia begins to grow peaches. He uses $1,000,000 in savings to purchase land, he rents equipment for $50,000 a year, and he pays workers $100,000 in wages. In return, he produces
250,000 baskets of peaches per year, which sell for $4.00 each. Suppose the interest rate on savings is 3 percent and that the farmer could otherwise have earned $45,000 as a shoe salesman.
What is the farmer's economic profit?
The peach farmer earns economic profit of $. (Enter your response as an integer.)
What is the farmer's accounting profit?
The peach farmer earns accounting profit of $
(Enter your response as an integer.)
Transcribed Image Text:Suppose a farmer in Georgia begins to grow peaches. He uses $1,000,000 in savings to purchase land, he rents equipment for $50,000 a year, and he pays workers $100,000 in wages. In return, he produces 250,000 baskets of peaches per year, which sell for $4.00 each. Suppose the interest rate on savings is 3 percent and that the farmer could otherwise have earned $45,000 as a shoe salesman. What is the farmer's economic profit? The peach farmer earns economic profit of $. (Enter your response as an integer.) What is the farmer's accounting profit? The peach farmer earns accounting profit of $ (Enter your response as an integer.)
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