Economan has been infected by the free enterprise bug.

He sets up a firm on extraterrestrial affairs. The rent of the building is $4,000, the cost of the two secretaries is

$40,000, and the cost of electricity and gas comes to

$5,000. There’s a great demand for his information, and his total revenue amounts to $100,000. By working in the firm, though, Economan forfeits the $50,000 he could earn by working for the Friendly Space Agency and the $4,000 he could have earned as interest had he saved his funds instead of putting them in this business.

(LO11-1)

a. What is his profit or loss by an accountant’s definitions?

b. What is his profit or loss by an economist’s definitions?