Jesse owns a shop called J's Select Store in Wisconsin. During the first year of operation, J's Select Store incurred many costs. In that year, Jesse spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Jesse also put in her own money in the business, in which she would have earned $1,500 interests if she put that money in the bank, and her previous job, which she could get back at any time, paid her $50,000. a) If J's Select Store received $80,000 in revenues, what were the economics profits? b) If J's Select Store received $70,000 in revenues, what were the accounting profits?

Jesse owns a shop called J's Select Store in Wisconsin. During the first year of operation, J's Select Store incurred many costs. In that year, Jesse spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Jesse also put in her own money in the business, in which she would have earned $1,500 interests if she put that money in the bank, and her previous job, which she could get back at any time, paid her $50,000. a) If J's Select Store received $80,000 in revenues, what were the economics profits? b) If J's Select Store received $70,000 in revenues, what were the accounting profits?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Production And Costs

Section8.2: Two Sides To Every Business Firm

Problem 4ST

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