Should you keep operating until the end of the year

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Reference no: EM132136499

Question: You are the manager of a small farm. Your yearly revenue is $300,000. You work in your farm. You could work somewhere else for $50,000 a year. However, if you work elsewhere the lack of supervision hurts performance and farm revenues will decrease by $20,000 as a result. You pay other workers $140,000 a year. The land is yours, and could be rented for a different purpose or to a different farmer for $50,000 a year. Every year, you get a farming license for $50,000. You buy it January 1st and it is good for one whole year. The yearly cost of seed, water and fertilizer is $40,000. It is now March

a. Calculate your yearly economic profits

b. Calculate your yearly accounting profits.

c. Should you keep operating until the end of the year?

d. Should you keep operating next year? You may assume all the numbers from this year stay the same and there is no uncertainty.

Reference no: EM132136499

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