If, as an entrepreneur, I am earning accounting profits of $60,000 per year and the opportunity cost of my time is $50,000,

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Quizplus · Accepted Answer

Economic profits take into account the opportunity cost of the entrepreneur's time. In this case, the accounting profits are $60,000, but the opportunity cost of the entrepreneur's time is $50,000, so the economic profits are only $10,000 ($60,000 - $50,000 = $10,000). The entrepreneur is still making a profit, but it is smaller than the accounting profit. Therefore, closing the business is not necessary.

If, as an Entrepreneur, I Am Earning Accounting Profits of $60,000