Answer to Question #114161 in Economics for FARES

Question

Ed is a freelance writer who could work for a newspaper at $25,000 a year but instead works
for himself for $41,000 a year. His only business expenses are $1,000 for writing materials and
$12,000 for rent. Ed's normal profit is $1,000. Ed's economic profit from working as a freelance
writer is

Answer 1

Ed's normal profit is $41,000 - (1,000 + 12,000) = 28,000.$ Ed's economic profit from working as a freelance writer is $28,000 - 25,000 = 3,000.$