Calculate the accounting profit and the economic profit

Reference no: EM13189506

Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4000 per year if alternatively invested. He has been offered $15,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $3000 per year. Total annual revenue from pottery sales is $72,000. Calculate the accounting profit and the economic profit for Gomez's pottery firm

Reference no: EM13189506

Questions Cloud

Suffer from chronic pessimism : Wayne tends to suffer from chronic pessimism, is hypersensitive to rejection, worries obsessively, and is prone to sudden bursts of irrational anger. Wayne is exhibiting the symptoms of

Strategies needed to create a diversified workforce : Research at least four (4) peer-reviewed academic sources. Analyze and explain four (4) critical trends affecting the growth of public personnel today. Analyze and evaluate four (4) strategies needed to create a diversified workforce.

What are the tr and mr for each acre : A purely competitive wheat farmer can sell any wheat he grows for $10 per bushel.His five acres of land show diminishing returns, because some are better suited for wheat production than others. The first acre can produce 1000 bushels of wheat, the..

Watching aggression on television causes : Research has shown that watching aggression on television causes children to become physically more aggressive. As a result, the V-chip was created. What goal of psychology does this best represent?

Calculate the accounting profit and the economic profit : Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth)..

What were the causes of the american revolution : how did the British colonists evolve from good citizens to revolutionaries who could compose and back something as radical as the Declaration of Independence? What were the causes of the American Revolution?

Contribute to the depression of 1837 : Which of the following did not contribute to the depression of 1837?

Recent changes in information technology affected society : How have the recent changes in information technology affected society? Are these changes for the better, the worse, or both and what are one or two of the biggest social changes?

Where to use the the midpoint formula : Suppose that the total revenue received by a company selling basketballs is $600 when the price is set at $30 per basketball and $600 when the price is set at $20 per basketball. Without using the midpoint formula, can you tell whether demand is e..

User Account

All Pages