You use $50,000 of your own money to start an espresso stand. During the first year you earn a10% return on that investment. If the current interest rate on savings is 8%, you earn an economicprofit of$4,000.O $1,000.0-$4,000.$5,000.

Accounting profit:Investment: $50,000Return: 10%Accounting profit: 10% of $50,000 = $5,000…

Answered: You use $50,000 of your own money to…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 39P: A firm is considering an investment that will earn a 6 rate of return. If it were to borrow the...

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You use $50,000 of your own money to start an espresso stand. During the first year you earn a 10% return on that investment. If the current interest rate on savings is 8%, you earn an economic profit of $4,000. O $1,000. 0-$4,000. $5,000.