Before last year, Ellie (Luke's wife) taught music and earned $30,400. She also earned $9600.00 by renting out their basement as a studio apartment. Ellie saves every month. At the end of a typical year she would have saved a total of 10% from their wages and the income earned from the basement for the entire year, and the total interest earned (for the entire year) from this saving would be 0.5% of total amount saved.

At the beginning of last year, Ellie stopped teaching music. She also stopped renting out their basement, and began to use it as the office for her new web design business. The balance on her saving account was $150,000, and she took $6,000 from this account to buy a new laptop computer and a new printer (which also functions as a scanner and a facsimile). She also borrowed $12,000 from the local bank to purchase additional machinery and equipment (a graphic tablet, desktop computer, studio camera and an external hard drive). Her loan payment is $350 per month. During last year, she paid $3500 for the lease of a web server and $2,400 for high-speed internet service. She also spent $3,600 purchasing miscellaneous supplies for her business.

At the end of last year, Ellie received a total revenue from web site designing of $48,500 and earned 5% interest on her savings account balance (for the entire year). After the first year of operation, Luke (who has his successful business) believes that Ellie made the right decision. However, Ellie feels bit skeptic and believes that she should have remained as a music teacher. Before getting into the web design business, she would have saved some of her total earnings, but now, with the web design business, she is not adding any money to her saving account. Also, doing a bit of research, she realizes that the market value (at the end of last year) for the laptop computer and the printer is $5000.

1. What is Ellie's Revenue from her new web design business last year?

2. What is Ellie's Accounting Costs from her new web design business last year?

3. What is Ellie's Economic Costs from her new web design business last year?

4. What is Ellie's Implicit Costs from her new web design business last year?

5. What is Ellie's Accounting Profit from her new web design business last year?

6. What is Ellie's Economic profit from her new web design business last year?

7. Given that last year, Ellie's __________ profit from her new web design business was _______ we can conclude that __________ assessment is correct. Specifically the ________ from last year _______ sufficient to cover her ________ from the same year