Robert left a law firm to begin his own catering business. Robert’s salary at the law firm was $100,000. He put $40,000 of his own funds into the business to purchase cooking equipment. His funds were previously earning 10 percent per year. The cost of operating the business including food and supplies was $60,000. Robert’s catering firm earned $170,000 in revenues for the first year. Robert’s brother insists that he should go back to the law firm, since he was making $100,000 there. Robert says his brother is wrong. Robert is right because
A. he is making $6,000 in economic profits.
B. he is making $110,000 in accounting profits.
C. he is making $106,000 in economic profits.
D. he likes cooking.
Answer: A
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