Please note the following calculations to obtain her economic profit:

Revenue:430,000

Accounting Costs:120,000 (labor) + 206,000 (travel and merchandise) = 326,000

Accounting profit:$104,000(430000 - 120000 - 206000)

Opportunity Costs:80,000(forgone teaching income) +

24,000 (forgone rental income) = 104,000

Economic Profit:$0(430000 -120000 - 206000 - 80000 - 24000)

Note that since opportunity cost means the NEXT BEST alternative, only the teaching qualifies as the opportunity cost, not the interior decorator. So that means any data on the decorating should not be considered here. She is really giving up teaching to do the store, not decorating. Therefore, the calculations show that her economic profit is ZERO.

The economic profit of zero means that she should be indifferent between the two (teaching and running the store), and should choose to do what she enjoys most.

Now, suppose I told you that as a geography teacher, she also received free medical insurance coverage worth $20,000 per year, but now has to pay $25,000 per year out of pocket when running her own business. How would this affect your calculations?