Question

You are considering quitting your job where you earn $3,300 per month and opening a new business. The cost of renting an office is $2,500 per month, hiring employees would cost $3,100 per month, and utilities would cost $200 per month. The new business will earn a total revenue of $6,300 per month.

Required:
What is your economic profit?

Answer 1

Answer:

Economic profit= -$2,800

Explanation:

Giving the following information:

Old job= $3,300

The cost of renting an office is $2,500 per month, hiring employees would cost $3,100 per month, and utilities would cost $200 per month.

The new business will earn a total revenue of $6,300 per month.

The economic profit incorporates the opportunity cost of the old job.

Economic profit= 6,300 - 2,500 - 3,100 - 200 - 3,300

Economic profit= -$2,800