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Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop,and spends $20,000 per
Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop,and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment that could earn him $4,000 per year if alternatively invested. He has been offered $15,000 per year to work as a potter for a competitor. Total annual revenue from pottery sales is $72,000. What is the economic profit of Gomez's pottery firm? Explain your reasoning.
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