Clare sells handmade purses. She uses her savings of 55,000, which was earning $
ID: 1192154 • Letter: C
Question
Clare sells handmade purses. She uses her savings of 55,000, which was earning $750 per year in an investment account, to fund her business. Her other expenses include materials costs of S950. S500 in rent, and labor costs of $1,400. If Clare sells 40 purses at $90 each, what is her economic profit or loss? Is Clare earning a normal rate of return? Clare is earning a below normal rate of return because of her economic loss. Clare's economic profit is zero. She is earning a normal rate of return. Clare is earning an above normal rate of return because her economic profits are positive. Clare's economic profit is $0. She is earning a below normal rate of return.Explanation / Answer
Clare sells handmade purses. She uses her savings of 55,000, which was earning $