## (Solved) 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...

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.Â

a. Calculate the accounting profit for Gomezâ€™s pottery firm. \$.

b. Now calculate Gomez's economic profit. Â \$.

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This question was answered on: Sep 05, 2019

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