Question
Anne started a consulting firm. She purchased computers and other equipment for $30,000 and spent $10,000 on marketing and advertising. She also hired an assistant
Anne started a consulting firm. She purchased computers and other equipment for $30,000 and spent $10,000 on marketing and advertising. She also hired an assistant for $50,000/year and her other expenses such as utilities are $12,000. Her revenues for the year were $180,000. If Anne had a regular job, she would earn $220,000. She would also receive a stipend for $20,000 per year. (10 points) A. Identify her implicit and explicit costs. B. Based on the information above, calculate Annes accounting and economic profits. C. Based on the profits you calculated, should Anne start her firm or go back to working a regular job?
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