Bill is an economics lecturer who earns $40,000 teaching, but decides to quit his job and fulfill his dream of catering barbecues. During his first year of barbecuing he earned total revenue of $60,000. He spent $30,000 on food and supplies. He also paid his wife $10,000 to help serve food. The normal profit for an entrepreneur running a barbecue business is $3,000. He also rented an industrial grill/fry truck for $12,000. An accountant would conclude that Bill's profit was

Question

Quizplus · Accepted Answer

Bill's revenue: $60,000
Costs:
- Food and supplies: $30,000
- Wife's salary: $10,000
- Renting a truck: $12,000

Total costs: $52,000

Therefore, Bill's profit is revenue - total costs:

$60,000 - $52,000 = $8,000

His profit of $8,000 is less than the normal profit of $3,000, indicating that he did not make as much profit as he would have if he had stayed teaching.

Bill Is an Economics Lecturer Who Earns $40,000 Teaching, but Decides