Samantha has been working for a law firm and earning an annual salary of $90,000 . She decides to open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which
she was earning annual interest of $1,000 . Assuming that there are no additional expenses, Samantha's total annual cost of production will equal
a. $55,200
b. $221,400
c. $91,000
d. $146,200
e. $145,200
D
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If profit is commonly defined as "total revenue minus total cost," then
A) there is no way to measure losses. B) a negative profit implies a loss. C) losses can only be measured as "total cost minus total revenue." D) profits must always equal losses.
Martha's Cleaning Services is a perfectly competitive firm that currently cleans 30 offices a week and charges $20 per office, which is the going market price. Martha's marginal cost is $15
What should Martha do to increase her economic profit? Clean more offices? Raise her price? Explain your answer.