Calculate the economist profit vs accountants profit

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A grage run by its owner mechanic has a gross income of Rs. 20000, annual expenses amount to Rs 17000 this leaves an annual profit of Rs 3000. the fixed investment (i.e., the investment in building and machine)is say, Rs.8000. the prevailing rate of interest is 5%: This means that the fixed investment by our gagage owner would have earned Rs. 400 a zear, had the business not been carried on, might amount to anouther Rs. 200 a Year; While the owner mitht have earned Rs. 1800 a year from his managerial and engineering skills by working for some concern. The sum of these opportunity costs is Rs. 2400. If we consider these imputed costs as well, we find that our garage owner is making a profit of Rs 3000 is the accounting profit per year. In economics profit, we have to take care of opportunity costs as well.

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Reference no: EM13225597

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Calculate the economist profit vs accountants profit : A grage run by its owner mechanic has a gross income of Rs. 20000, annual expenses amount to Rs 17000 this leaves an annual profit of Rs 3000. the fixed investment (i.e., the investment in building and machine)is say, Rs.8000. the prevailing rate of ..

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