1. Shelly owns a bookstore, where she earns all of its accounting profits in addition to a $30,000 a year salary she pays herself. Last year, her bookstore's accounting profit was $50,000. Shelly has a standing offer of $35,000 a year to write for Penguin Publishing, and if she had invested her capital outside her company, she would have earned $22,000 that year. What was Shelly's economic profit?
2. Our firm specializes in recycling used plastics into consumer goods. You have three production opportunities:

1. You can produce plastic utensils for a revenue of $30,000 while production will cost $15,000.

2. Alternatively, you can produce lampshades: you calculate that at the optimal production, you expect to sell 2,000 lampshades every year at $10 each, and your average total cost per lampshade will be $2.

3. You also have the option to shut down your factory and produce nothing at a cost of $1,000 a year.

Which opportunity do you choose?

• You produce plastic utensils
• You produce lampshades
• You shut down

What is your accounting profit?

What is your economic profit?