Question
Frank quits his job as a gardener, where he was earning a salary of $40,000 per year, to start a garden consulting business in a
Frank quits his job as a gardener, where he was earning a salary of $40,000 per year, to start a garden consulting business in a building that he owns and that he could otherwise rent out for $18,000 per year. He expects to have the following annual expenses in his new business: equipment and business clothes $5,000, other expenses, $10,000. Frank expects to make annual revenues of 70,000. Find the annual accounting cost and the annual economic cost associated with Frank's garden consulting business. Calculate the annual net economic benefits of his business. From an economic perspective, is it a wise decision to start the business?
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