Calculating economic profit for first year

Assume that the banker is employed at an annual salary of $60,000. She as well has financial assets worth of $40,000 which earns $1,500 per year in interest. She too owns a commercial building that she rents out for $20,000 per year. Now assume that she quits this job to open her own business, invests all her financial assets in latest business and employs her commercial building for her business rather than renting it out. In first year of business, she takes in revenues of $140,000 and makes the payments of $70,000 to cover her explicit costs. Her economic profit, the first year will be: (1) -$30,000. (2) $10,000. (3) -$51,500. (4) -$11,500. (5) $30,000.

Find out the right answer from the above options.

View Complete Question

Related Questions in Microeconomics

Q : Marginal revenue at possible output

At each possible output level, there a purely competitive firm’s marginal revenue curve is: (w) above its demand curve. (x) below its demand curve. (y) identical along with its demand curve. (z) steeper than its demand curve.

Q : Oligopolistic nature of industries The

The oligopolistic nature of several industries is probably to be attributable to: (1) overly expansionary macroeconomic policies. (2) corporate instability. (3) economies of scale. (4) cooperative gaming. (5) unstable Nash equilibrium.

Q : Perspective of Society with Economic

By the perspective of society as an entire, in that case land resources are: (w) variable in supply. (x) perfectly elastically supplied. (y) the closest of all resources to generators of pure economic rents. (z) increased through cultivating previousl

Q : Consequence on inventories When planned

When planned savings are bigger or smaller than planned investment, then what will be its consequence on inventories? Answer: It will raise or reduce the inventorie

Q : Standard of Income Distribution

According to the requirements standard of income distribution: (w) marginal productivity is easily measured. (x) people’s needs are proportional to their marginal products. (y) income must be distributed in proportion to people’s needs. (z

Q : Quantity of good supplied-Law of supply

The law of supply states that the amount of a good supplied is: (i) Legally governed by the production regulations. (ii) Inversely related to its absolute price. (iii) Recognized by the consumer tastes in the free market economy. (iv) Positively relat

Q : Purely competitive and monopolistic

Which one is correct ? A) Both purely competitive and monopolistic firms are "price takers." B) Both purely competitive and monopolistic firms are "price makers." C) A purely competitive firm is a "price taker," while a monopolist is a "price maker." D) A purely compe

Q : Private demands and supplies to assign

Reliance on private demands and supplies to assign goods and resources is least certain to outcome an economically ineffective solution just because: (i) Producers encompass monopoly power. (ii) A good is non-rival and non-exclusive. (iii) Consumption

Q : Consequences of rise in union wages Can

Can someone help me in finding out the right answer from the given options. The possible consequences of a rise in union wages comprise reduced: (1) Union employment and a refusal in non-union wages. (2) Shares of national income to the labor however growth of union e

Q : Profit-maximizing competitor in short

This profit-maximizing pure competitor would close down within the short run when the price fell below the price resultant to: (i) point c. (ii) point d. (iii) point e. (iv) point f. (v) point g.

Discover Q & A

Leading Solution Library

Avail More Than 1438051 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1927945
Asked

3,689

Active Tutors

1438051

Questions
Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment