Malinalli is a painter and coder who likes both professions equally. She can earn $\$ 80,000$ as a painter or $\$ 70,000$ per year as a coder, and has no other costs associated with either profession.

What is Malinalli's economic profit if she chooses to be a coder instead of a painter?

Choose 1 answer:
(A) $-\$ 150,000$
(B) $\$ 80,000$
(c) $\$ 0$
(D) $-\$ 10,000$
(E) $\$ 70,000$

Question

Malinalli is a painter and coder who likes both professions equally. She can earn $\$ 80,000$ as a painter or $\$ 70,000$ per year as a coder, and has no other costs associated with either profession.

What is Malinalli's economic profit if she chooses to be a coder instead of a painter?

Choose 1 answer:
(A) $-\$ 150,000$
(B) $\$ 80,000$
(c) $\$ 0$
(D) $-\$ 10,000$
(E) $\$ 70,000$

Accepted Answer

∻Solution∻ ‖ a ⋮ Economic Profit Calculation: Economic profit is calculated as total revenue minus total costs, including both explicit and implicit costs. ‖ ‖ b ⋮ Implicit Cost of Choosing Coding over Painting: If Malinalli chooses to be a coder, the implicit cost is the forgone salary from painting, which is $80,000. ‖ ‖ c ⋮ Total Revenue from Coding: The total revenue from coding is the salary Malinalli earns as a coder, which is $70,000. ‖ ‖ d ⋮ Economic Profit as a Coder: Economic profit = Total Revenue - Explicit Costs - Implicit Costs. Since there are no explicit costs mentioned, and the implicit cost is the forgone salary from painting, the economic profit is $70,000 - $80,000 = -$10,000. ‖ ∻Answer∻ ⚹ (D) $-\$10,000 ⚹ ∻Key Concept∻ ⚹ Economic Profit ⚹ ∻Explanation∻ ⚹ Economic profit takes into account both explicit and implicit costs, including opportunity costs of the next best alternative foregone. In this case, it's the forgone salary from not choosing the painting profession. ⚹◊How would Malinalli's decision to choose being a coder over a painter impact the overall market equilibrium in terms of labor supply and wages?⍭ Generate me a similar question◊$

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