Question

Suppose that Bob leaves a job that pays $100,000 per year in order to open a new sponge business. His insurance cost is $8,000, his material cost is $15,000, his lease payments are $8,000 and his sales revenue is $120,000. Bob's economic profit is:

Answer 1

-$11,000 is the economic profit or we can say it is a loss.

Explanation:

The job paid Bob = $100000

The insurance cost is = $8,000

The material cost is = $15,000

The lease payments are = $8,000

The sales revenue is $120,000.

So, Bob's economic profit is:
`120000-100000-8000-15000-8000=-11000`

Therefore, his economic profit is -$11000.