1 Fall 2017-251-Micro: Fall 2017-251-86 Gomez runs a small pottery firm. He hire

Question

1 Fall 2017-251-Micro: Fall 2017-251-86 Gomez runs a small pottery firm. He hires one helper at $15,000 per year, pays invested in equipme estimates to eatrepreneural talents are worth ss.000 per year Total annual revenue from pottery sales annual rent of $6,500 for his shop, and spends $23,000 per year on materials He has $40,000 of hisunds nt (pottery wheels, kilns, and so fortithat could earn hense000 per year Talte natively meste d He has beenfered S20500 per year to work asapte 1 ra con petty He s $82.000 sezooo Instructions: Enter your answers as whole numbers a. Calculate the accounting profit for Gomez's pottery frm S

Explanation / Answer

Explicit cost are those cost of fop whoch are purchased from the market=15000+6500+23000=44500

Implicit cost are those cost of fop which is directly owned by manager itself=6000+20500+5000=31500

Total revenue=82000

A) Accounting profit=revenue-explicit cost=82000-44500=37500

B)economic profit=TR-explicit cost-implicit cost=82000-31500-44500=6000

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