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 store.

Answer 1

Answer and Explanation:

The computation of the economic profit is shown below:

Economic profit = Revenue from flower shop - costs of a flower shop - salary of the job

= $100,000 - ($30,000 - $10,000) - $70,000

= -$10,000

As there is an economic loss so you should not open the flower store

Therefore the same would be considered