Your friend is thinking about opening a wine bar. He estimates that it would cost $400000 per year to rent the location and buy the stock. In addition he would have to quit his $120000 per year job as an accountant. Suppose your uncle thought he could sell $500000 worth of wine in a year. Which statement is true? Total cost of running the wine bar is $520000 and he should not open the wine bar since his economic profits will be negative. His economic profits are $120000 because that is what he could earn as an accountant Total cost of running the wine bar is $400000 and he should open the wine bar since his economic profits would be $100000. His accounting profits are $100000 which is enough to make the wine bar worth opening

Your friend is thinking about opening a wine bar. He estimates that it would cost $400000 per year to rent the location and buy the stock. In addition he would have to quit his $120000 per year job as an accountant. Suppose your uncle thought he could sell $500000 worth of wine in a year. Which statement is true? Total cost of running the wine bar is $520000 and he should not open the wine bar since his economic profits will be negative. His economic profits are $120000 because that is what he could earn as an accountant Total cost of running the wine bar is $400000 and he should open the wine bar since his economic profits would be $100000. His accounting profits are $100000 which is enough to make the wine bar worth opening

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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