Emily Adessa is an attorney employed by a large law firm at a salary of $85,000 per year. She is considering whether to become a sole practitioner, which would probably generate annually $410,000 in operating revenues and $290,000 in operating expenses.
1. Present two tabulations of the annual income effects of these alternatives. The second tabulation should include the opportunity cost of Adessa’s compensation as an employee.
2. Suppose Adessa prefers less risk and chooses to stay an employee. Show a tabulation of the income effects of rejecting the opportunity of independent practice.

  • CreatedNovember 19, 2014
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