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In: Economics

Suppose your current job pays you $250,000 a year. However, you are considering starting your own...

  1. Suppose your current job pays you $250,000 a year. However, you are considering starting your own company. Based upon your research, you estimate your first year
    total revenue to be $6,500,000. There are however several costs of running the
    company during this first year, such as the cost of materials which will equal $1,800,000, employees who will receive in total $1,500,000, utilities which will cost $1,300,000, and rent that will be paid to the landlord that equals $1,700,000. Based on this information, solve for both your accounting profit and economic profit during this first year. Also, state whether you are better off starting this company or staying in your current job.

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Expert Solution

Rahul Sunny answered 2 years ago
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