Chris was the business manager for a real estate firm earning an annual salary of $45,000. Then Chris decided to become a consultant. Chris hired an administrative assistant at $20,000 per year and rents office space (utilities included) for $3,000 per month. Chris earned $150,000 in total revenue the first year.
Q1 chris's economic profit is?
Q2 chris's normal profit?
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- that's was my answer for the normal profit but unfortunately $94000 is not one of the answers the only available answers are: $15000/$20,000/$36000/$45,000
- May 09, 2018 at 1:38am
- But that is how normal profits are calculated. what about the answer for economic profits?
- May 09, 2018 at 1:41am
- yeah i know, that's why it confused me. and it's true for the economic profits
- May 09, 2018 at 1:45am
- I have read somewhere that normal profits equal thecost of production implying that it is zero. In this case, normal profits equal the opportunity cost hence it is $4500
- May 09, 2018 at 1:46am