Osvaldo makes $40,000 a year as a soccer coach. He also owns and rents out a small store for extra income of $60,000 a year. He wants to use the space for a Boba (Pearl tea) shop. His expenses at the boba shop would be $80,000 per ingredients and hiring a worker. He also would pay $20,000 per year in insurance. He would make $140,000 in revenues. What are his economic profits if he opens the ice cream store

Osvaldo and Pearl Tea Shop

His economic profits if he opens the ice cream store is:

= ($20,000).

Explanation:

a) Data and Calculations:

Annual salary as a soccer coach = $40,000

Rent income from a small store = $60,000

Expenses for the Pearl tea shop

Ingredients and labor = $80,000

Insurance =                      20,000

Total expenses =         $100,000

Revenue from the Pearl Tea Shop = $140,000

Less total expenses                             100,000

Less opportunity cost (rent income)    60,000

Economic loss =                                  $20,000

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