Question

Raj opens up a lemonade stand for two hours. He spends $10 for ingredients and sells $60 worth of lemonade. In the same two hours, he could have mowed his neighbor’s lawn for $40. Raj has an accounting profit of________ and an economic profit of____________ .

Answer 1

Answer:

Accounting profit = $50

Economic profit = $10

Explanation:

Accounting profit = Revenue - Explicit cost

 $60 - $10 = $50

Economic profit = Accounting profit - Opportunity cost

$50 - $40 = $10

I hope my answer helps you