The calculations show that your mother economic profit is -$4,000, and are as follows:

Revenue: 455,000

Accounting Costs: 160,000 (labor) + 200,000 (travel and merchandise) = 360,000

Accounting profit: $95,000(455,000 - 160,000 - 200000)

Opportunity Costs: 75,000(forgone teaching income) + 24,000 (forgone rental income) = 99,000

Economic Profit: -$4000(455,000 - 160,000 - 200,000 - 75,000 - 24,000)

Now, suppose your mother indicates that in the teaching job her employer paid $30,000 a year for her as a medical insurance benefit. She also tells you that she did not include her salary of $55,000 in her labor costs of $160,000 at the store.

1.How would this change your calculations and your advice to her on whether to stay in the store business or go back to teaching?

2.Assume at this time that she places a $15,000 value per year on the freedom of being her own boss.