Thomas sets up a new coffee sh
Thomas sets up a new coffee shop in a building he owns. He puts$200,000 of his money into the business. He could have got 8%interest on this money if he had deposited it in an investmentaccount. He gives up his job, which paid him $50,000 a year. Hecould rent the building out for $10,000 a year.
His business incurs explicit costs of $80,000 (excluding anysalary for himself).
Based on the information above, choose the correct answer foreach of the following questions.
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What is his economic profit if revenues are $180,000? |
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His revenues are $80,000 in year 1. What is his economicprofit? |
Answer:
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