Pikachu wants to open a store to sell pens and ramen. He must borrow $10,000 from...

Pikachu wants to open a store to sell pens and ramen. He must borrow $10,000 from Papa Smurf's crew at 125% interest per year. He must pay this money back to Papa Smurf in his first year. He also must rent a storefront for $20,000 per year and hire his friend Patrick Star and pay him $250,000 per year. In his first year, he sold 1,000 pens at $3 each and 250 bowls of ramen at $4 each. A bowl of ramen costs $1 in raw material costs and each pen costs him $2 each. For his 1st year please provide (1) his total economic cost (2) his economic profit (3) his accounting profit (4) should he have quit his job?

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Rahul Sunny answered 1 year ago

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