Calculate Jill’s accounting profit.

Calculate Jill’s accounting profit.

Jill resigns
from her job, at which she was earning $ 40,000 per year, and uses her $120,000
savings,

on which she was
earning 5 percent interest, to start a business. In the first year, she earns
revenue of

$200,000, and her
costs are as follows:

Rent $25,000

Utilities $12,000

Wages $30,000

Materials $20,000

a. Calculate Jill’s
accounting profit.

b. Calculate Jill’s
economic profit.

c. What makes
economic profit different from accounting profit?


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