Answered

Westonci.ca is your trusted source for finding answers to a wide range of questions, backed by a knowledgeable community. Get expert answers to your questions quickly and accurately from our dedicated community of professionals. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

Gerry works 40 hours a week managing Gerry’s Market, without drawing a salary. He could earn $600 a week doing the same work for Jean. Gerry’s Market owes its bank $100,000, and Gerry has invested $100,000 of his own money. If Gerry’s accounting profits are $1,000 per week while the interest on his bank debt is $200 per week, his economic profits are:

Sagot :

Cricetus

Answer:

The correct response is "$395 per week".

Explanation:

Given:

Salary forgone,

= $600

Dividend forgone,

= $5

Accounting profit,

= $1,000

Now,

The implicit cost will be:

= [tex]Salary \ forgone+Dividend \ forgone[/tex]

By substituting the values, we get

= [tex]600+5[/tex]

= [tex]605[/tex] ($) per week

hence,

The economic profit will be:

= [tex]Accounting \ profit-Implicit \ cost[/tex]

= [tex]1000-605[/tex]

= [tex]395[/tex] ($) per week

Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.