1. Accounting versus economic profit
In a given year, a consulting firm has the following costs: $610,000 in wages and salaries paid to employees; $74,000 in rental payments for office
space; and $23,000 for office supplies, advertising, and utilities. In addition, Clancy, the owner of the firm, works for the firm full time (and is not paid
a salary, since he receives the firm's profits). If he did not work for the consulting firm, Clancy could earn $125,000 per year working as a consultant
for another firm.
For each possible amount of total revenue, fill in the accounting profit and economic profit of the consulting firm.
Total Revenue Accounting Profit Economic Profit
($)
($)
($)
710,000
760,000
810,000
860,000
$
