2. Lucy quits a $50,000 job to open her waffle business. She makes $225,000 in revenue from her first year of waffle sales. She pulls $50,000 out of an account that returns 3% interest per year and invests the entire amount in her business. She also borrows $50,000 at 10% interest rate to invest in her business. After these initial investments, she also spends $10,000 on inputs and $50,000 on worker salaries.

Question

Find total revenue, accounting cost, economic cost, implicit cost, explicit cost, economic profit, accounting profit.

Answer 1

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