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Set up the accounting profit equation

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Adam and Jax are looking to start a lawncare business over the summer. They've estimated to spend $4,000 to rent equipment and $200 for insurance. In addition, they've also estimated $4 per yard for gas and oil. Based on previous demand, they expect to get $40 per yard. If they decide to not open this business, they could work on a local farm for the summer earning $3,000 ($1,500 each).

  1. What is their opportunity cost if they decide to operate this business?
  2. Set up the accounting profit equation.
  3. Set up the economic profit equation.
  4. How many customers/lawns will they need to break-even (Hint: set economic profit to 0)?

Reference no: EM132240865

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