Jacqui decides to open her own business and earns $50, 000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30, 000, $40, 000, and $45, 000. What is Jacqui's economic profit from running her own business?
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Economic profit calculated as accounting profit minus opportunity as job offer.
1 2 3
Accounting profit $50 000 $50 000 $50 000
Opportunities (job offers) $30 000 $40 000 $45 000
Economic profit $20 000 $10 000 $5 000
Jacqui receives economic profit $ 20,000, $10,000 and $5,000 respectively from running her own
business.
Answer
Jacqui’s economic profit is $ 20,000, $ 20,000, $10,000 and $5,000 respectively from running her
own business.
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