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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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