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Should the sail maker sail away? Jeny has been working for a large sail-making firm that makes sails for racing and cruising yachts. Somehow she
Should the sail maker sail away? Jeny has been working for a large sail-making firm that makes sails for racing and cruising yachts. Somehow she feels undervalued and has been thinking about leaving her employer and starting her own small sail-making business. She estimates that she can sell $300 000 worth of sails a year. To open this business, Jeny must use the area under a house she owns as the sail loft and the upstairs rooms for storage. Prior to using the house for her business she rented it out for $20 000 per year. She will also hire an assistant sail maker at a salary of $60 000 per year and spend $100 000 each year on materials like cloth and thread used to make sails. Jen's performance was above the average sail maker and presently the sail-making firm pays Jen a handsome $100 000 a year. Calculate Explicit (Direct) cost and Implicit (Indirect) Cost and both the Accounting profit and Economic profit Then based only on economic decision-making, do you predict that she will leave her current employer to start her own new business
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