1.1. Hiro owns and operates a small business that provides economic consulting services. During the year he spends

$55,000 on travel to clients and other expenses, and the computer that he owns depreciates by $2,000. If he didn’t use the computer, he could sell it and earn yearly interest of $100 on the money created through this sale. Hiro’s total revenue for the year is $100,000. Instead of working as a consultant for the year, he could teach economics at a small local college and make a salary of $50,000.

a. What is Hiro’s accounting profit?

b. What is Hiro’s economic profit?

c. Should Hiro continue working as a consultant, or should he teach economics instead?