Refer to Problem 2
a. Suppose the cafe's revenues and expenses remain the same, but recyclers' earnings rise to $1,100 per year. Is the cafe still making an economic profit? Explain.
b. Suppose John had not had to get a $10,000 loan at an annual interest rate of 10 percent to buy equipment, but instead had invested $10,000 of his own money in equipment. How would your answer to 2a and 2b change?
c. If John can earn $1,000 a year as a recycler, and he likes recycling just as well as running the cafe, how much additional revenue would the cafe have to collect each year to earn a normal profit?