Ralph owns a small pizza restaurant, where he works full-time in the kitchen. His total revenue is $100,000 a year, and his rent is $36,000 a year. He pays his one employee
$24,000 a year, and the cost of ingredients and overhead averages $60,000 a year. Also,
Ralph forgoes $35,000 per year as the manager of a competing pizza restaurant nearby. His
economic profit for the year was:
$55,000.
-$55,000.
-$20,000.
$20,000.
$34,000.