You decide to quit your $60,000-per-year job as an information technology specialist and illustrate children's books. At the end of the first year of illustrating, you have earned $20,000. You also spent $5,000 for paint and paper. Your economic profit in the first year as an illustrator is: - $40,000. $20,000. $15,000. - $45,000

Question

Business

Richard Meyers

27 May, 12:53

You decide to quit your $60,000-per-year job as an information technology specialist and illustrate children's books. At the end of the first year of illustrating, you have earned $20,000. You also spent $5,000 for paint and paper. Your economic profit in the first year as an illustrator is: - $40,000. $20,000. $15,000. - $45,000

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Kaylynn Avila · Answer 1

Answer: $ - 45,000

Explanation:

Economic profit = Accounting profit - Opportunity cost

Accounting profit = Revenue - Cost

Accounting profit = $20,000 - $5000 = $15,000

Economic profit = $15,000 - $60,000 = $ - 45,000

Opportunity cost is the cost of choosing one alternative over other alternatives.