Explain what steve means by high economic profits

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Steve was a Sydney architect who sold his business, even though it made him anaverage of $200000 per year of accounting profit. He then bought a bed-andbreakfastplace in the country, which gives him an accounting profit of $40000per year. ‘I was making big accounting profits in Sydney but my economicprofits were very low,' Steve explains. ‘Now I'm living in the country myaccounting profits are much lower, but I'm enjoying relatively high economicprofits.' Explain what Steve means. Why might his economic profits fromrunning a bed-and-breakfast be higher than those of working as an architect?

Reference no: EM131029847

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