Thelma has a long term lease on her cotton farm with an annual lease payment of $10,000. Prior to planting in the spring of 2020, she predicts that she will have $5000 left after paying all of her costs except for the annual lease payment. In this case, what should Thelma do? Select one: a. continue to operate because total revenue exceeds total cost b. shut down and experience an accounting loss of $5000 c. continue to operate even though she predicts an accounting loss of $5000 d. exit the market and experience an accounting loss of $10,000

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Accounting and Economic Profit analysis

One comes across the concept of Profits in the context of business and in analyzing the results of business activity. Profits of a business can be accounting profits, and they can also be economic profits. So how does one understand the concept of accounting versus economic profits?