Problem: 1- Economic profit Peter has a decent job making $44,000 per year, howe

Question

Problem: 1- Economic profit Peter has a decent job making $44,000 per year, however, he does not enjoys his work. Peter has been illegally growing cannabis in his basement for years; he enjoys this and is really good at it. Since Cannabis will soon be legalized Canada, he is considering starting a cannabis growing company. He understands that when cannabis is legal, the price will drop. He estimates he can sell $109,000 worth of cannabis. His expenses will be: Utilities $18,000; raw materials $12,000; Sales and distributions $20,000; Equipment Maintenance S6,000; Website Hosting $1,000; Interest on loan $5,000; Insurance $3,000; Permits and Licenses $4,000. Page 1 of 2 400 words English (United States) + 142%

Explanation / Answer

1.

Economic profit = Revenue – explicit cost – implicit cost

Economic profit = 109000 - (18000+12000+20000+6000+1000+5000+3000+4000) - 44000

Economic profit = -$4000

So, there is an economic loss of $4000.

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