1.Mr Adrian own a construction company with an asset worth RM400,000. Adrian proudly told to some of his fellow directors that his revenues were typically RM35,000 per month, while his operating cost for fuel was RM8,000 and maintenance RM5,000 per month. The estimated depreciation was RM10,000 per month. An office space similar to Peter 's office space can be rented for RM15,000 per month. If Peter was working for one of his competing construction companies, he would have earned RM5,000 per month. a.List the items that Adrian would consider to compute his explicit costs. b.List the items that Adrian would consider to compute his implicit costs. c.Compute Adrian monthly total economic cost. d.Should Adrian continue his business? Explain.
1.Mr Adrian own a construction company with an asset worth RM400,000. Adrian proudly told to some of his fellow directors that his revenues were typically RM35,000 per month, while his operating cost for fuel was RM8,000 and maintenance RM5,000 per month. The estimated depreciation was RM10,000 per month. An office space similar to Peter 's office space can be rented for RM15,000 per month. If Peter was working for one of his competing construction companies, he would have earned RM5,000 per month. a.List the items that Adrian would consider to compute his explicit costs. b.List the items that Adrian would consider to compute his implicit costs. c.Compute Adrian monthly total economic cost. d.Should Adrian continue his business? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
1.Mr Adrian own a construction company with an asset worth RM400,000. Adrian proudly told to some of his fellow directors that his revenues were typically RM35,000 per month, while his operating cost for fuel was RM8,000 and maintenance RM5,000 per month. The estimated depreciation was RM10,000 per month. An office space similar to Peter 's office space can be rented for RM15,000 per month. If Peter was working for one of his competing construction companies, he would have earned RM5,000 per month.
a.List the items that Adrian would consider to compute his explicit costs.
b.List the items that Adrian would consider to compute his implicit costs.
c.Compute Adrian monthly total economic cost.
d.Should Adrian continue his business? Explain.
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