John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of delicious pastries and bread, and his business has been quite successful. John used to work as a manager in a nearby restaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $25,000. To assess the overall performance of his bakery, John meticulously tracks his financials. For the year 2023, John has gathered the following information: Total revenue from pastry and bread sales: $100,000. Cost of ingredients and materials: $30,000 Rent for the bakery space: $12,000 Wages paid to his employees: $20,000 Advertising expenses: $5,000

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of delicious
pastries and bread, and his business has been quite successful. John used to work as a manager in a nearby
restaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $25,000. To
assess the overall performance of his bakery, John meticulously tracks his financials. For the year 2023,
John has gathered the following information:
NB:
Total revenue from pastry and bread sales: $100,000.
Cost of ingredients and materials: $30,000
Rent for the bakery space: $12,000
Wages paid to his employees: $20,000
Advertising expenses: $5,000
The bakery space could be rented out for $10,000 per year if John did not use it for his bakery.
John invested $40,000 of his personal savings into the bakery when he started it. These savings could
have earned him a 5% annual interest in a bank savings account.
Calculate John's economic profit for the year 2023.
a) $8,000
b) $6,000
c)-$4,000
d) $-2,000
Transcribed Image Text:John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of delicious pastries and bread, and his business has been quite successful. John used to work as a manager in a nearby restaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $25,000. To assess the overall performance of his bakery, John meticulously tracks his financials. For the year 2023, John has gathered the following information: NB: Total revenue from pastry and bread sales: $100,000. Cost of ingredients and materials: $30,000 Rent for the bakery space: $12,000 Wages paid to his employees: $20,000 Advertising expenses: $5,000 The bakery space could be rented out for $10,000 per year if John did not use it for his bakery. John invested $40,000 of his personal savings into the bakery when he started it. These savings could have earned him a 5% annual interest in a bank savings account. Calculate John's economic profit for the year 2023. a) $8,000 b) $6,000 c)-$4,000 d) $-2,000
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