The sole proprietor of the "Books and Children" bookstore receives all accounting profits earned by her firm and a $ 28,000-a-year salary she pays herself. She has a standing salary offer of $35,000 a year if she agrees to work for a large corporation. If she had invested her capital outside her own company, she estimates that would have returned $ 22,000 a year. Last year, her accounting profit was $50,000.a. Calculate her implicit cost.b. Calculate her economic profit.
The sole proprietor of the "Books and Children" bookstore receives all accounting profits earned by her firm and a $ 28,000-a-year salary she pays herself. She has a standing salary offer of $35,000 a year if she agrees to work for a large corporation. If she had invested her capital outside her own company, she estimates that would have returned $ 22,000 a year. Last year, her accounting profit was $50,000.a. Calculate her implicit cost.b. Calculate her economic profit.
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 3DQ
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Transcribed Image Text:The sole proprietor of the "Books and Children" bookstore receives all accounting profits earned by her firm and a $
28,000-a-year salary she pays herself. She has a standing salary offer of $35,000 a year if she agrees to work for a
large corporation. If she had invested her capital outside her own company, she estimates that would have returned $
22,000 a year. Last year, her accounting profit was $50,000.a. Calculate her implicit cost.b. Calculate her economic
profit.
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