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20 May, 10:57

Billy Bob runs a seafood restaurant. Last year, he earned $70000 in revenue. He had explicit costs of $15000. Billy Bob could have made $30,000 working for the county, and he could have received an additional $20,000 if he had rented out his building and equipment. Calculate Billy Bob's accounting profit.

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  1. 20 May, 14:38
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    Accounting profit = $55,000

    Explanation:

    Giving the following information:

    Last year, he earned $70000 in revenue. He had explicit costs of $15000.

    The accounting profit doesn't take into account the opportunity cost of other income options.

    Accounting profit = 70,000 - 15,000 = $55,000
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