ECON 262
In 2013, Roger was a welder and earned $50,000 per year. But he thought that maybe he could make more money if he didn't work for someone else and decided to start his own business selling computers. He started his business at the beginning of 2014. Roger’s revenue from his computer business in 2014 was $120,000. He cashed in a $40,000 savings bond that was paying him 7% interest per year in order to start his business. He used the entire $40,000 to buy his starting inventory. Roger also hired Joe to work for him part time and paid him a total of $15,000 during 2014. Roger’s other business expenses for 2014 were equal to $7,800. Roger also had to give up doing welding jobs on the side in order to work in his new business. He used to make $4,400 per year doing these welding jobs on the side. Roger is wondering if he should stick to his new business or return to his former welding job. Roger's only concern is making money and he is not making any forecasts about future profit, etc.
What are Roger's:
Total Revenue = $__________________
- Explicit Costs $_________________________________________________
= Accounting Profit or Loss $_______________
- Implicit Costs $_________________________________________________
= Economic Profit or Loss $__________________
Would
you recommend Roger continue in his business or go back to being a welder?
Explain you answer.