Final answer:
To determine if Eryn's legal practice would be profitable, explicit costs like office rent and the law clerk's salary are subtracted from potential earnings. With an expected income of $200,000 and total costs of $85,000, her practice would be profitable with an estimated annual profit of $115,000, assuming no additional implicit costs are involved.
Step-by-step explanation:
The question regarding the annual fee for each additional or change in office or place of business can be best addressed by looking at the costs involved in setting up and maintaining a business operation. When calculating the profitability of a business, like Eryn's legal practice, one must take into account not just the explicit costs such as office rent and salaries, but also the implicit costs, which include the opportunity costs of the owner's time and potential earnings elsewhere.
For Eryn, the explicit costs include an office with an annual rent of $50,000 and a law clerk's salary of $35,000 per year. Eryn expects to earn $200,000 annually from her own practice. To determine if her legal practice would be profitable, we subtract the total costs from her expected earnings:
- Expected earnings: $200,000
- Office rent: $50,000
- Law clerk's salary: $35,000
- Total costs: $85,000
Profit calculation:
Profit = Expected earnings - Total costs
Profit = $200,000 - $85,000
Profit = $115,000
If these figures are accurate, Eryn's legal practice would indeed be profitable, with an expected annual profit of $115,000. However, one must keep in mind any additional implicit costs that have not been accounted for which could affect the actual profitability.