Madelyn owns a small pottery factory. She can make 1,000 pieces of pottery per year and...
Madelyn owns a small pottery factory. She can make 1,000 pieces
of pottery per year and sell them for $100 each. It costs Madelyn
$20,000 for the raw materials to produce the 1,000 pieces of
pottery. She has invested $100,000 in her factory and equipment:
$50,000 from her savings and $50,000 borrowed at 10% ( assume that
she could have loaned her money out at 10%, too). Madelyn can work
at a competing pottery factory for $40,000 per year.
The economic profit at madelyn's pottery factory is:
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