Chris was the business manager for a real estate firm earning an annual salary of $40,000.Then Chris decided to become a consultant.Chris hired an administrative assistant at $15,000 per year and rents office space (utilities included)for $3,000 per month.Chris earned $100,000 in total revenue the first year as a consultant.
Chris's accounting profit is _______ and Chris's economic profit is _______.
A)$100,000;$64,000
B)$64,000;$49,000
C)$49,000;$9,000
D)$9,000;0

Question

Quizplus · Accepted Answer

Revenues of $100,000 minus explicit costs of $36,000 (rent)plus $15,000 (administrator salary)equals $49,000.Subtracting the implicit cost of Chris' old salary of $40,000 equals $9,000.

Chris Was the Business Manager for a Real Estate Firm