Answer :
Answer:
$-12,000
Explanation:
Economic profit is accounting profit less implicit cost or opportunity cost.
Economic profit = Accounting profit - Opportunity cost
Accounting profit = total Revenue - total Cost
$260,000 - $230,000 = $30,000
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
The opportunity cost of Rosemarie starting her own restaurant is the salary she woold have been earning if she didn't leave her job = $12,000
Also the opportunity cost of using the space she inherited is the rent that would have been paid if she didn't use it as a restaurant = $30,000
Total opportunity costs = $30,000 + $12,000 = $42,000
Economic profit = $30,000 - $42,000 = $-12,000
I hope my answer helps you
Answer:
She actually made an economic loss of $12,000
Explanation:
The economic profit is considers the opportunity cost while the accounting profit does not. The cost of the alternatives forgone is deducted from the explicit cost in the determination of economic profit.
As such, while the accounting profit would be the revenues less the total cost, the economic profit would be computed a step further by deducting the salaries she would have earned and the rental income on the real estate if it had been rented out.
Economic profit = $260,000 - $230,000 - $30,000 - $12,000
= -$12,000