The Midnight hour a local nightclub earned $100,000 in accounting profit last year. This year the owner, who had invested $1million in the club, decided to close the club. What can you say about economic profit (and the rate of return) in the nightclub business?

Answer 1

a) you could say the nightclub had zero or negitive economic profits.
b) The rate of return on capital in the nightclub business is 10%