Michael runs a small pottery firm. He hires one helper at $14,000 per year, pays annual rent of $8,000 for his shop, and spends $24,000 per year on materials. He has $50,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $7,500 per year if alternatively invested. He has been offered $35,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $4,000 per year. Total annual revenue from pottery sales is $75,000. Michael's accounting profit is $29000. (Enter your response rounded to the nearest dollar and include a negative sign if necessary.) Michael's economic profit is $ (Enter your response rounded to the nearest dollar and include a negative sign if necessary.)

Michael runs a small pottery firm. He hires one helper at $14,000 per year, pays annual rent of $8,000 for his shop, and spends $24,000 per year on materials. He has $50,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $7,500 per year if alternatively invested. He has been offered $35,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $4,000 per year. Total annual revenue from pottery sales is $75,000. Michael's accounting profit is $29000. (Enter your response rounded to the nearest dollar and include a negative sign if necessary.) Michael's economic profit is $ (Enter your response rounded to the nearest dollar and include a negative sign if necessary.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Michael runs a small pottery firm. He hires one helper at $14,000 per year, pays annual rent of $8,000 for his shop, and spends $24,000 per year on materials. He has $50,000 of his own funds invested in
equipment (pottery wheels, kilns, and so forth) that could earn him $7,500 per year if alternatively invested. He has been offered $35,000 per year to work as a potter for a competitor. He estimates his
entrepreneurial talents are worth $4,000 per year. Total annual revenue from pottery sales is $75,000.
Michael's accounting profit is $ 29000. (Enter your response rounded to the nearest dollar and include a negative sign if necessary.)
Michael's economic profit is $
(Enter your response rounded to the nearest dollar and include a negative sign if necessary.)

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