Neville is a lawyer at a large law firm where he earns a salary of $170,000 per year. He is thinking of leaving the firm to set up his own law office. To do this, he would need to invest $140,000 of his savings, which currently earns 5% in interest each year. He estimates that if he starts a law office, his annual revenue will be $510,000, and his explicit financial costs will be $300,000. How much would Neville earn in economic profits or losses if he starts his own law office

$33,000

Explanation:

Economic profit = accounting profit - implicit cost

Accounting profit= total revenue - explicit cost

Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials

Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

Accounting profit = $510,000 - $300,000 = $210,000

Implicit costs = amount he would forgo as salary in the large law firm and interest he would lose on his investment

Interest he would lose on his investment = 0.05 x 140,000 = $7000

Implicit cost = $170,000 + $7000 = $177,000

Economic profit = $210,000 -  $177,000 = $33,000

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi