Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Econometrics A Modern Approach

Authors: Jeffrey M. Wooldridge

2nd Edition

0324113641, 9780324113648

More Books

Students also viewed these Economics questions

Question

Summarize the forms and functions of nonverbal communication.

Answered: 1 week ago

Question

What approach(es) to psychotherapy do you prefer?

Answered: 1 week ago

Question

2. How do I perform this role?

Answered: 1 week ago