**Problem 38: Dr. Khan's Dental Practice**Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000.**Analysis:**- **A) His explicit costs are $330,000.** - Explicit costs include rent, salaries, insurance, and miscellaneous expenses. - Calculation: $90,000 (rent) + $60,000 (office manager) + $24,000 (hygienist) + $150,000 (insurance) + $6,000 (miscellaneous) = $330,000- **B) His implicit costs are $170,000.** - Implicit costs include the salary he gave up ($150,000) and the normal profit ($20,000). - Calculation: $150,000 (foregone salary) + $20,000 (normal profit) = $170,000- **C) His economic profit is zero.** - Economic profit considers both explicit and implicit costs and is calculated as follows: - Economic Profit = Total Revenue - Explicit Costs - Implicit Costs - Calculation: $500,000 (revenue) - $330,000 (explicit costs) - $170,000 (implicit costs) = $0- **D) Only answers A and C are correct.**- **E) Answers A, B, and C are correct.**The correct answer is **E**: Answers A, B, and C are correct.

here we can find the correct option as follow

38) Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000. A) His explicit costs are $330,000. B) His implicit costs are $170,000. C) His economic profit is zero. D) Only answers A and C are correct. E) Answers A, B, and C are correct.

38) Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000. A) His explicit costs are $330,000. B) His implicit costs are $170,000. C) His economic profit is zero. D) Only answers A and C are correct. E) Answers A, B, and C are correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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