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Hiro owns and operates a small business that provides economic consulting services. During the year he spends $55,000 on travel to clients and other expenses, and the computer that he owns depreciates by $2,000. If he didn't use the computer, he could sell it and earn yearly interest of $100 on the money created through this sale. Hiro's total revenue for the year is $100,000. Instead of working as a consultant for the year, he could teach economics at a small local college and make a salary of $50,000.

1. What is Hiro's accounting profit?

2. What is Hiro's economic profit?

3. Should Hiro continue working as a consultant, or should he teach economics instead?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M975252

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