Answer:
Zach's accounting profit for the year was $6,000.
His economic profit was -$6000
Step-by-step explanation:
Consider the provided information.
During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box.
Therefore the total revenue is
[tex]6000\times 2.5=15000[/tex]
Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000.
Accounting profit = total revenue-explicit costs
= $15,000-$9,000 = $6,000
Hence, Zach's accounting profit for the year was $6,000.
Zach took $400,000 out of the bank and bank account pays 3 percent interest per year.
[tex]400,000\times 0.03=12000[/tex]
Economic profit = accounting profit-interest on capital invested
= $6000-$12000 = -$6000
Hence, his economic profit was -$6000
