Ben currently works in a large company where he makes $100,000 per year. He is considering starting his own business, where he expects to earn $175,000 per year. To start his own business, he has determined that he would need to rent an office in an office building and hire an assistant. The current yearly rent for an office space is $57,000. He also believes he could hire an assistant for $33,000 per year. Calculate Ben's economic profit.

Question

Johan Hendrix

Business

18 November, 07:51

Ben currently works in a large company where he makes $100,000 per year. He is considering starting his own business, where he expects to earn $175,000 per year. To start his own business, he has determined that he would need to rent an office in an office building and hire an assistant. The current yearly rent for an office space is $57,000. He also believes he could hire an assistant for $33,000 per year. Calculate Ben's economic profit.

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Answers (1)

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Isiah Sweeney · Answer 1

It is more convenient to keep his old job.

Explanation:

Giving the following information:

Ben currently works in a large company where he makes $100,000 per year.

He is considering starting his own business:

Income = $175,000 per year.

office space = $57,000.

assistant = $33,000 per year.

Economic profit includes the opportunity cost.

Income = 175,000

Office space = (57,000)

Assistant = (33,000)

Opportunity cost = (100,000)

Economic profit = - $15,000

It is more convenient to keep his old job.