Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 2 - The Market System and the Circular Flow - Problems - Page 45: 2

Answer

(a) Yes (b) Organic soap company

Work Step by Step

In business, she will make a profit of revenue minus costs. For the soap making company, her revenue is 465,000 and her costs are 395,000 annually so her profits would be 465,000-395,000 = 70,000 dollars annually. For the cable competitor, her revenue is 3,275,000 and her costs are 3,250,000 so her profits would be 3,275,000-3,250,000= 25,000 dollars annually. Her current job pays 50,000 annually. She would make more money taking the soap making opportunity and earning 70,000 annually.
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