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31 August, 07:13

Jaynet spends $30,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm - one offer was for $95,000 per year, and the other was for $100,000. However, she turned both jobs down to continue a painting career. If Jaynet sells 25 paintings per year at a price of $8,000 each:

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  1. 31 August, 10:26
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    She is right, it is a better option for her to continue with her painting carrer. As is provides better economic profit.

    Explanation:

    accounting profit:

    the sum of the explicit revenues less the explicit cost

    25 painting at 8,000 each 200,000

    supplies expense (30,000)

    accounting profit 170,000

    economic profit:

    from the accounting pprofit, it subtract the opportunity cost, which is the cost for the best rejected option.

    accounting profit 170,000

    opportunity cost (100,000)

    economic profit 70,000
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