Chris owns his own business restoring antique cars. Last year, he restored 24 cars, which he sold for $1,100,000. The parts and supplies necessary for the restoration totaled $400,000. He paid $360,000 to his six employees and a salary of $110,000 to himself. The rent and utilities on his building were $80,000.

Recently, Chris received an offer to work as Jay Leno’s personal auto restorer, at a salary of $275,000. Chris also received a $180,000 offer to host a car-related reality TV show for the Discovery Channel. Chris can only work one job.

a. What is Chris’s accounting cost? His accounting profit?

b. What is Chris’s economic cost? His economic profit?

c. Compare what Chris earns in his current job (both his salary and his company’s accounting profit) to his best outside offer. Does the figure you calculated look familiar? Does it shed any light on the meaning of economic profit?