Richard owns and operates an Electronics and Computer shop in Los Angeles. While Richard has a Mechanical Engineering degree and could work for CISCO Systems Corp. earning $76,000 a year, his true passion is managing his own shop. Below is a list of Richard's expenses for 2015. Use the following information to answer the questions: (show your work)

1. What is Richard's Accounting Profit?

2. What is Richard?s Economic Profit?

3. Given Richard?s economic profit why does he still decide to manage his own shop instead of working for CISCO?

Transcribed Image Text:

Revenue in 2014 Rent Equipment Cost Supplies Depreciation of Assets $ 105,000 $20,000 $5,200 $2,750 $1,050 Revenue in 2014 Rent Equipment Cost Supplies Depreciation of Assets $ 105,000 $20,000 $5,200 $2,750 $1,050

Answer rating: 100% (QA)

1 Accounting profit Total revenueexplicit costs 1050002... View the full answer