QUESTION $22$

$(4$ Marks$)$

John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of delicious pastries and bread, and his business has been quite successful. John used to work as a manager in a nearby restaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $$25,000.$ To assess the overall performance of his bakery, John meticulously tracks his financials. For the year $2023,$ John has gathered the following information:

Total revenue from pastry and bread sales: $$100,000.$

: Cost of ingredients and materials: $$30,000$

Rent for the bakery space: $$12,000$

Wages paid to his employees: $$20,000$

Advertising expenses: $$5,000$

NB:

The bakery space could be rented out for $$10,000$ per year if John did not use it for his bakery. John invested $$40,000$ of his personal savings into the bakery when he started it$.$ These savings could have earned him a $5\%$ annual interest in a bank savings account.

Calculate John's economic profit for the year $2023.$

a$)$ $$8,000$

b$)$ $$6,000$

c$)-$$$4,000$

d$)$ $$-2,000$