(Answered) Gomez runs a small pottery firm he hires one helper at

Management Studies

Gomez runs a small pottery firm. He hires one helper at $15,000 per year, pays annual rent of $6,500 for his shop, and spends $23,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $6,000 per year if alternatively invested. He has been offered $20,500 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $5,000 per year. Total annual revenue from pottery sales is $82,000.

Instructions: Enter your answers as whole numbers.

a. Calculate the accounting profit for Gomez's pottery firm.

b. Now calculate Gomez's economic profit.

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Business Management, Management Studies

Category:- Business Management
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