Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 14 - Rent, Interest, and Profit - Problems - Page 311: 5a

Answer

Scenario 1: Accounting loss of ${$20,000}$ Scenario 2: Accounting profit of ${$180,000}$

Work Step by Step

In the low-revenue scenario, your accounting profit/loss will be the revenue minus expenses. So, ${$200,000}$ - ${$150,000}$ - ${$40,000}$ - ${$30,000}$= ${−$20,000}$ So you will suffer an accounting loss of ${$20,000}$. In the high-revenue scenario, your accounting profit/loss will be the revenue minus expenses. So, ${$400,000}$ - ${$150,000}$ - ${$40,000}$ - ${$30,000}$ = ${$180,000}$. So you will have an accounting profit of ${$180,000}$.
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