During a year of operation, a watch company sells total 30,000 wrist watches at a price of $50 per each and hires total 40 workers to produce them. The company pays an annual wage of $30,000 to each of the workers and spends $100,000 on raw materials and utilities. The owner of the company has already owned her machinery used to produce the wrist watches. Instead of using it for the production, she can rent it for $300,000 per year.
(a) Obtain the company’s revenue per year.
(b) Obtain the company’s explicit costs, implicit costs, and total economic costs per year.
(c) Obtain the company’s accounting profits and economic profits per year.
(d) Suppose that you are a business consultant for the company. What would you advise the owner to do?