1. Figure the opportunity and out-of-pocket costs for the following business situation.
2. How much revenue is required for an economic profit?

An MBA student abandons her part-time job as a CPA earning $25000 per year and starts an evening designated driver business, a taxi service for people who would prefer to drink with no concern for driving afterwards and for bars that are concerned about patrons who appear impaired and unable to drive.  She supplies all the local drinking establishments with attractive stickers for their phones and colorful posters for the restrooms that display information about her services and advertises locally for a total promotion spending of $7500 annually.  She purchases five cars for the business.  International students at the university are quite willing to lease these cars for varying periods so that she can earn $4800 per car annually if she did not employ them in her new enterprise.  She hires part-time students at minimum wage ($4.25 per hour) with an annual payroll that includes fringes and other payments of $55845.  Liability insurance premiums total $5000 per year.  A new telephone line dedicated to the business costs $120 per year and the annual gasoline and maintenance require about $6000 during the same period.  She locates company records and conducts business in a spare bedroom in her apartment.  If she had a roommate, the roommate would contribute $250 monthly toward the rent.