Class summary 12/12

Profits = Total revenues – Total costs ( a. Explicit(accounting profits)   b. Implicit(Economic profits) )

Wage – contract reduces uncertainty on both sides

Rachel had $30k job

-owned building that costs for $6k

-savings acct of $2.3k at 10%

starts pizza business

-quits job, uses building, cashes out savings + borrow $20k

You use your own building to run business, that does cost the opportunity to rent it to others

Economists care about opportunity costs