Definition for both accounting profit and economic profit


Problem: Jaynet spends $25,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm - one offer was for $125,000 per year, and the other was for $105,000. However, she turned both jobs down to continue a painting career. If Jaynet sells 35 paintings per year at a price of $5,000 each:

a. What are her accounting profits?

$ _______

b. What are her economic profits?

$ _______

Please give a definition for both accounting profit and economic profit and show step-by-step calculations for both.

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Managerial Economics: Definition for both accounting profit and economic profit
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