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Say you are thinking of entering the bottled water market. You think you can make $500,000 a year selling bottled water with expenses of $350,000
Say you are thinking of entering the bottled water market. You think you can make $500,000 a year selling bottled water with expenses of $350,000 a year, but you will have to leave your current job where you earn $100,000 a year.
(a) Identify the market structure the bottled water market (probably) follows. Very briefly justify your choice of market structure. (2 marks)
(b) Calculate the expected accounting profit and economic profit you will make. What will happen to any economic profit in the long run? Briefly explain your answer. (4 marks)
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