Pamela wants to open a swim school. She estimates that her annual costs of renting a building with a pool are $100,000 and the cost of labor (other than her own) is $50,000, but she will have no other costs. She earns $35,000 at her current job. She estimates that her annual revenue from the swim school will be $160,000.
A. Calculate her accounting profit.
B. Calculate her economic profit.
C. If her goal is to make as much money as possible, should she open the swim school? Explain.

Question

Quizplus · Accepted Answer

The Answer of Pamela wants to open a swim school. She estimates that her annual costs of renting a building with a pool are $100,000 and the cost of labor (other than her own) is $50,000, but she will have no other costs. She earns $35,000 at her current job. She estimates that her annual revenue from the swim school will be $160,000.
A. Calculate her accounting profit.
B. Calculate her economic profit.
C. If her goal is to make as much money as possible, should she open the swim school? Explain.

Pamela Wants to Open a Swim School