Suppose Ernie Gives Up His Job as a Financial Advisor

Multiple Choice

Suppose Ernie gives up his job as a financial advisor for pets, for which he earned $30,000 per year, to open up a store selling spot remover to Dalmatians. He invested $10,000 of his savings, which had been earning 5 percent interest. This year's revenues in the new business were $50,000 and explicit costs were $10,000. Calculate Ernie's economic profit.

A) $10,000
B) $50,000
C) $20,000
D) $40,000
E) $9,500