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Costs and Profit Maximization Under Competition End of Chapter Problem 21

Economics

Costs and Profit Maximization Under Competition End of Chapter Problem

21. Sandy owns a firm with annual revenues of $1,000,000. Wages, rent, and other costs are $900,000.

a. Sandy's accounting profit is $

 

 

b. Suppose that instead of being an entrepreneur, Sandy could get a job with one of the following annual salaries (i) $50,000; (ii) $100,000; or (iii) $250,000. Assume that a job would be as satisfying to Sandy as being an entrepreneur.

Sandy's economic profit under scenario (i) is $

 

.

Sandy's economic profit under scenario (ii) is $

 

.

Sandy's economic profit under scenario (iii) is $

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