1)The Midnight hour, a local nightclub, earned $100,000 in accounting profit last year. This year t

1)The Midnight hour, a local nightclub, earned $100,000 in accounting profit last year. This year the owner, who had invested $ 1 million in the club, decided to close the club. What can you say about economic profit (and the rate of return)in the nightclub business? ANSWER: Economic Profit = TR(total revenue)- TC(total economic cost) EP = $100,000 – $1,000,000 EP = -$900,000 Since EP is a negative number the firm should shut down, the output is not positive, therefore the company operates at a loss, the manager needs to determine how long they want to continue with this loss process. Does this sound like the correct answer? Thanks, EY

 

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1)The Midnight hour, a local nightclub, earned $100,000 in accounting profit last year. This year t was first posted on June 29, 2020 at 1:23 am.
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