If, as an entrepreneur, I am earning accounting profits of $70,000 per year and the opportunity cost of my time is $50,000

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Quizplus · Accepted Answer

Economic profits take into account both accounting profits and opportunity costs. Therefore, in this situation, the economic profit is calculated as $70,000 (accounting profit) - $50,000 (opportunity cost) = $20,000. This means that there is still a positive return on investment, but it is not as high as the accounting profit suggests. Closing the business would only be necessary if the economic losses were greater than the accounting profits.

If, as an Entrepreneur, I Am Earning Accounting Profits of $70,000