Mathematics

Luca

1 September, 08:45

4. Mike and Martha are accountants. Each works out of a 500 square foot office. Mike owns his office. Martha rents hers from a landlord for $1000 per month (the market price for 500 sq. ft. offices). In every other respect, Mike and Martha are the same. Whose profits are lower?

a. Mike's

b. Martha's

c. Their accounting profits are the same.

d. Their economic profits are the same.

e. None of the above.