Respuesta :
Your economic profit of opening the flower shop would be $(10,000). Hence, you rather not open the flower shop and work for a firm instead.
Economic profit or loss shows the different between the revenue received from the sale of an output and the total costs of all inputs used. The total costs calculated in economic profit covers implicit, explicit, and opportunity costs.
Explicit costs are expenses that directly related to the business process. Implicit costs refer to the revenue a business forgos by using an asset it owns rather than selling or renting it. Opportunity costs include any potential benefits a business misses out when choosing one alternative over another.
On this case, we know that:
Projected revenue from flower shop = $100,000
Rent cost = $30,000
Supplies = $10,000
Salary from working for a firm = $70,000
To calculate the economic profit, we have to include all implicit, explicit and opportunity costs in this case.
We know that:
Rent cost --> implicit cost
Supplies --> explicit cost
Salary from working for a firm --> opportunity cost
Hence, the economic profits you could make if you open the flower shop is:
Economic profit = projected revenue - rent cost - supplies - salary from working
Economic profit = $100,000 - $30,000 - $10,000 - $70,000
Economic profit = $(10,000)
Since the economic profit shows a negative amount, it means that instead of gains economic profit, you will experience economic loss if you open the flower shop. Then, it would be more beneficial for you to work for a firm than opening your own flower shop.
Learn more about Economic Profit here: https://brainly.com/question/15186300
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Complete Question:
You are considering opening a small flower store. you anticipate that you will earn $100,000 each year in revenue. it will cost you $30,000 each year to rent the space necessary to run your business. additionally, you will need to spend $10,000 each year on flower seeds, utilities, and other expenses necessary to operate your flower shop. you have just graduated from college with a degree in economics and have received an offer to work for a firm with a yearly salary of $70,000.
What is your anticipated economic profit of opening the flower shop?
Based on this information, you ____ open the flower shop.
