Engineering

Charlize Davies

22 May, 20:16

2. Mr. Ahmed owns and operates a small business that provides economic consulting services. During the year he spends $ 55,000 on travel to clients and other expenses, and the computer that he owns depreciates by $ 2,000. If he didn't use the computer, he could sell it and earn yearly interest of $ 100 on the money created through this sale. Mr. Ahmed's total revenue for the year is $ 100,000. Instead of working as a consultant for the year, he could teach economics at a small local college and make a salary of $ 50,000.

i. What is Ahmed's accounting profit?

ii. What is Ahmed's economic profit?