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Kevin Coughlin, a lawyer working for a large law firm and earning $60,000 per year, is contemplating setting up his own law practice. He estimates that renting an office would cost $10,000 per year, hiring a legal secretary would cost $20,000 per year, renting the required office equipment would cost $ 15,000 per year, and purchasing the required supplies, paying for electricity, telephone, and so forth would cost another 45,000. The lawyer estimated that his total revenues for the year would $100,000, and he is indifferent between keeping his present occupation with the large law firm and opening his own law office. 1. How much would be the explicit costs of the lawyer for running his own law office for the year? 2. How much would be the accounting costs ? The implicit costs? The economic costs? 3. Should the lawyer go ahead and start his own practice?
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