Your friend is thinking of opening a video store. She estimates it would cost $500,000 a year to rent the store and buy video stock. She is planning to quit her $50,000 a year job as an accountant to run the store. If there are no other costs of operation and the store's revenue is $530,000, the accounting profits will be
a. $50,000
b. $20,000
c. -$20,000
d. $30,000
e. $530,000
d. $30,000
Accounting profits: total revenue - explicit cost AP: 530,000 - 500,000 = 30,000
(Salary is not include when it says accounting profit. Only explicit costs are included.)
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