Problem 4 Hiro owns and operates a small business that provides economicconsulting services. During the year he spends $55,000 on travel to clients and otherexpenses, and the computer that he owns depreciates by $2,000. If he did not usethe computer, he could sell it and earn yearly interest of $100 on the money createdthrough this sale. Hiro's total revenue for the year is $100,000. Instead of working as aconsultant for the year, he could teach economics at a small local college and make asalary of $50,000. (a) What is Hiro's accounting profit? (b) What is Hiro's economicprofit? (c) Should Hiro continue working as a consultant, or should he teacheconomics instead?

(a) Hiro's accounting profit can be calculated by subtracting his explicit costs from his total…

Answered: Problem 4 Hiro owns and operates a…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter3: Your Role As A Consumer

Section3.1: Consumption, Income, And Decision Making

Problem 2R

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