Mi Fortunate Was Employed As Plant Manager

Mi Fortunate Was Employed As Plant Manager

Microeconomics. Help!? 3

Question: MI Fortune is the plant manager of a $ 50,000 company with $ 100,000 of savings in stock that generates 8% annual profit. He started a business on his own and invested all his savings in it. At the end of the first year, your account shows a net income of $ 55,000 after all operating expenses. Accounting income represents a 55% return on investment, said one accountant. Another accountant (who took a course in microeconomics) said. You have to pay the $ 50,000 you earn yourself, and your book profit of $ 5,000 is only 5% of the return on your investment.

What are the economic advantages (or disadvantages)? I don't know what to do here ...

Economic profit accounting is the difference between profit and other alternatives. In other words:

Economic benefits = Total income Total expenses Total cost Opportunity loss

3,000 = 55,000 58,000

If he does not start his own business, the profit will be 8% interest plus his salary of 50,000 which he will get on his ,000 100,000 ($ 8,000) investment. That would be a total of ,000 58,000 (58%). Because your accounting profit is only $ 55,000 (55%), you actually incur a financial loss of $ 3,000 (3%).

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Mi Fortunate Was Employed As Plant Manager