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Calculate the accounting profit for pottery firm
Course:- Business Economics
Reference No.:- EM131004794




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Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $18,000 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 $5,000 per year if alternatively invested. He has been offered $23,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $6,000 per year. Total annual revenue from pottery sales is $86,000. 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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