Reference no: EM132526607
Use the following information to answer questions 8 + 9.
Consider someone who gives up her job with a salary of $100,000 per year to start her own business. She invests $20,000 of her savings, which had been earning 10% per year. She converts her spare bedroom, which she had been renting out for $20,000 per year, to an office.
In the first year of the business she makes $150,000 in sales. Raw materials cost $50,000. She hired one assistant who made $60,000.
8. What was the economic loss for this entrepreneur for the year?
a. $82,000
b. $100,000
c. $72,000
d. $80,000
e. $90,000
The entrepreneur above left a job with a salary of $100,000 per year. At which of the prior salaries below would this entrepreneur actually elect to continue running this business?
a. $30,000
b. $20,000
c. $10,000
d. either (b) or (c)
e. The entrepreneur will elect to continue running the business given the current salary she is leaving behind.
What's the answer to the two questions?