John was a cook making the average cook salary of $60,000 per year. He also had an extra room in his house that he rented out for $10,000 per year. But John got "fed up" with his job and decided to quit and pursue his dream ... making toilets. He pays a worker $40,000 per year and spends $150,000 annually on material inputs. He also kicks the tenant out of his extra room and uses it to make toilets. Every year he sells 100 toilets at $2,500 each.
a. What are John's accounting profits as a toilet producer? (Show work)
b. What are John's economic profits as a toilet producer? (Show work)
accounting profit =... View the full answer