Sandy owns a firm with annual revenues of $1,000,000. Wages, rent, and other costs are $900,000.
a. Calculate Sandy’s accounting profit.
b. Suppose that instead of being an entrepreneur, Sandy could get a job with one of the following annual salaries
i) $50,000,
ii) $100,000
iii) $250,000.
Assume that a job would be as satisfying to Sandy as being an entrepreneur. Calculate Sandy’s economic profit under each of these scenarios.