A potential entrepreneur is trying to decide whether to open her own physical therapy practice. She currently makes $80,000 per year as a physical therapist at a hospital and will have to give up this job if she opens her own practice. If so, it will cost her $200,000 per year in rent and other operating expenses.

a) What are her accounting costs?

b) What are her economic costs?

c) Explain the difference between your answers to a) and b).

d) How much would she need to make in revenues to earn positive accounting profits?

e) How much would she need to make in revenues to earn positive economic profits?