Table 22.1 $$\begin{array}{l}
\text { Assume an apple farmer incurs the following costs and revenues }\
\begin{array} {| l | r| }
\hline \text { Fertilizer } & \$ 200 \
\hline \text { Seeds } & \$ 75 \
\hline \text { Water } & \$ 250 \
\hline \text { Wages } & \$ 750 \
\hline \text { Property taxes } & \$ 600 \
\hline \text { Interest paynents on borrowed funds } & \$ 1,200 \
\hline \text { Bales of apples } & \$ 4,000 \
\hline
\end{array}
\end{array}$$ Suppose the entrepreneur could earn $1,000 as an employee elsewhere.This means the accounting profit is
A)$1,525.
B)$925.
C)-$75.
D)-$1,000.

Question

Table 22.1 $$\begin{array}{l}
\text { Assume an apple farmer incurs the following costs and revenues }\
\begin{array} {| l | r| } 
\hline \text { Fertilizer } & \$ 200 \
\hline \text { Seeds } & \$ 75 \
\hline \text { Water } & \$ 250 \
\hline \text { Wages } & \$ 750 \
\hline \text { Property taxes } & \$ 600 \
\hline \text { Interest paynents on borrowed funds } & \$ 1,200 \
\hline \text { Bales of apples } & \$ 4,000 \
\hline
\end{array}
\end{array}$$ Suppose the entrepreneur could earn $1,000 as an employee elsewhere.This means the accounting profit is
A)$1,525.
B)$925.
C)-$75.
D)-$1,000.

Quizplus · Accepted Answer

Accounting profit is calculated by subtracting total explicit costs from total revenues. Here, the total costs are the sum of all listed expenses ($200 + $75 + $250 + $750 + $600 + $1,200 = $3,075), and the total revenue from selling apples is $4,000. Thus, the accounting profit is $4,000 - $3,075 = $925. The opportunity cost of $1,000 for not working elsewhere is not considered in accounting profit.

Table 221 Suppose the Entrepreneur Could Earn $1,000 as an Employee Elsewhere