Rob quit a job working 20 hours per week at a Subway sandwich shop to make sandwiches in his college dorm room that he sells to hungry students. If he had been paid $9 per hour at Subway and now works the same 20 hours per week but sells his sandwiches for $300 per week and pays only $100 per week for the supplies, how much economic profit does he make?

Question

Raymond Reynolds

Business

9 September, 11:37

Rob quit a job working 20 hours per week at a Subway sandwich shop to make sandwiches in his college dorm room that he sells to hungry students. If he had been paid $9 per hour at Subway and now works the same 20 hours per week but sells his sandwiches for $300 per week and pays only $100 per week for the supplies, how much economic profit does he make?

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Answers (1)

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Edwin Peck · Answer 1

It is economically profitable to make the sandwiches in his dorm.

Explanation:

Giving the following information:

Subway income = 20hours * $9 = $180

Now, he works the same 20 hours per week but sells his sandwiches for $300 per week and pays only $100 per week for the supplies.

The economic profit includes the opportunity cost of working on Subway.

Economic profit = 300 - 100 - 180 = $20

It is economically profitable to make the sandwiches in his dorm.