Entry, Exit, and Long Run Profitability $$ End of Chapter Problem

A year ago, Shani opened her own computer software company. Over the past year, her startup has generated $$500,000$ worth of

revenue. She hired two software engineers and paid each of them $$150,000$ over the past year. She also purchased web hosting

services that cost a total of $$30,000.$ To save money, Shani decided to run the business out of the basement of her house.

Previously, she had rented this space to a tenant for $$6,000$ per year. Instead of opening her own business, she could have

continued to work for Microsoft, where she would have earned $$200,000$ over the past year.

a$.$ What were the accounting profits of Shani's business over

the past year?

b$.$ What were her economic profits over the past year?