Joe was offered 500 for his business and all its equipment


Joe runs a shoe shine stand at the airport. Joe has no skills, no job experience, and no alternative job. Entrepreneurs in the shoe shine business earn $10,000 a year. Joe pays the rent of $2,000 a year, and his total revenue is $15,000 a year. He borrowed $1,000 at 20 percent a year to buy equipment. At the end of one year, Joe was offered $500 for his business and all its equipment. Calculate Joe's annual explicit costs, implicit costs, and economic profit.

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Econometrics: Joe was offered 500 for his business and all its equipment
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