Sally leaves her $24,000 secretarial position with a company and invests her savings of $15,000 (on which she was earning 6 percent interest)in her own Ready Sec agency.After expenses,her net income was $28,900.Her economic profit was

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting both explicit and implicit costs from total revenue. Sally's implicit costs include her forgone salary ($24,000) and forgone interest ($15,000 * 6% = $900), totaling $24,900. Her net income is $28,900, so her economic profit is $28,900 - $24,900 = $4,000.

Sally Leaves Her $24,000 Secretarial Position with a Company and Invests