# MIcroeconomics

Hi. THis is due Tuesday. I am working on it but can use some help. Peggy-Sue has been offered a job by Cookie monster inc for a salary of \$125,000 per year. Currently she is producing her own cookies and she has revenues of \$260,000 per year. Her costs are \$40,000 for labor, \$10,000 for rent, \$35,000 for ingredients, and \$5000 for utilities. She has \$100,000 of her own money invested in the operation, which, if she leaves, can be sold for \$40,000 that she can invest at 10% per year.
A)Calculate her accounting and economic profits.
B)Advise her as to what she should do.

Take a shot. Calculate her accounting and economic profits. With that, you will easily be able to advise her.

What I was wondering was whether I should add her \$100,000 investment as an expense when calculating her accounting profit. My Text book says its an implicit cost but wouldn't it be an explicit cost as well?

Thank you

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1. Peggy-Sue’s cookies are the best in the world, or so I hear. She has been offered a job by Cookie Monster, Inc., to come to work at \$125,000 per year. Currently, she is producing her own cookies, and she has revenues of \$250,000 per year. Her costs are \$50,000 for labor, \$15,000 for rent, \$70,000 for ingredients, and \$6,000 for utilities. She has \$100,000 of her own money invested in the operation, which, if she leaves, can be sold for \$30,000 that she can invest at 45 percent per year.

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