This question pertains to the rational decision-making model. In answering the questions below use examples to highlight your arguments. Make sure that your external research is properly cited (APA)
In his spare time, Mr. Smith makes chain mail using metal rings he buys from a hardware store, a C-clamp, and a pair of pliers. He sells the final product at local crafts fairs and at bikers' annual conventions. He argues that "The materials cost me $30, and the rest is just my labor, which is free. One vest sells for about $150, which gives me a net profit of $120 for three nights of work."
Is he talking about economic profit or accounting profit? Explain the difference between the two.
Also, comment on Mr. Smith's statement from an economic perspective (hint: implicit cost)
This question pertains to the rational decision-making model. In answering the questions below use examples to highlight your arguments. Make sure that your external research is properly cited (APA)
In his spare time, Mr. Smith makes chain mail using metal rings he buys from a hardware store, a C-clamp, and a pair of pliers. He sells the final product at local crafts fairs and at bikers' annual conventions. He argues that "The materials cost me $30, and the rest is just my labor, which is free. One vest sells for about $150, which gives me a net profit of $120 for three nights of work."
Is he talking about economic profit or accounting profit? Explain the difference between the two.
Also, comment on Mr. Smith's statement from an economic perspective (hint: implicit cost)
