CENGAGE MINDTAP omework(Ch 13) 1. Definition of economic costs Sean lives in Detroit and runs a business that sells guitars. In an average year, he receives $701,000 from selling guitars. Of this sales rever must pay the manufacturer a wholesale cost of $420,000; he also pays wages and utility bills totaling $247,000. He owns his showroom; if to rent it out, he will receive $9,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sea operate this guitar business, he can work as a financial advisor, receive an annual salary of $32,000 with no additional monetary costs, and his showroom at the $9,000 per year rate. No other costs are incurred in running this guitar business. Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling guitars. Implicit Cost Explicit Cost The salary Sean could earn if he worked as a financial advisor The wages and utility bills that Sean pays The wholesale cost for the guitars that Sean pays the manufacturer The rental income Sean could receive if he chose to rent out his showroom Complete the following table by determining Sean's accounting and economic profit of his guitar business. Accounting Profit Economic Profit Profit (Dollars)
CENGAGE MINDTAP omework(Ch 13) 1. Definition of economic costs Sean lives in Detroit and runs a business that sells guitars. In an average year, he receives $701,000 from selling guitars. Of this sales rever must pay the manufacturer a wholesale cost of $420,000; he also pays wages and utility bills totaling $247,000. He owns his showroom; if to rent it out, he will receive $9,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sea operate this guitar business, he can work as a financial advisor, receive an annual salary of $32,000 with no additional monetary costs, and his showroom at the $9,000 per year rate. No other costs are incurred in running this guitar business. Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling guitars. Implicit Cost Explicit Cost The salary Sean could earn if he worked as a financial advisor The wages and utility bills that Sean pays The wholesale cost for the guitars that Sean pays the manufacturer The rental income Sean could receive if he chose to rent out his showroom Complete the following table by determining Sean's accounting and economic profit of his guitar business. Accounting Profit Economic Profit Profit (Dollars)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:CENGAGE MINDTAP
omework(Ch 13)
1. Definition of economic costs
Sean lives in Detroit and runs a business that sells guitars. In an average year, he receives $701,000 from selling guitars. Of this sales revenue, he
must pay the manufacturer a wholesale cost of $420,000; he also pays wages and utility bills totaling $247,000. He owns his showroom; if he chooses
to rent it out, he will receive $9,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sean does not
operate this guitar business, he can work as a financial advisor, receive an annual salary of $32,000 with no additional monetary costs, and rent out
his showroom at the $9,000 per year rate. No other costs are incurred in running this guitar business.
Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling guitars.
Implicit Cost Explicit Cost
The salary Sean could earn if he worked as a financial advisor
The wages and utility bills that Sean pays
The wholesale cost for the guitars that Sean pays the manufacturer
The rental income Sean could receive if he chose to rent out his showroom
Complete the following table by determining Sean's accounting and economic profit of his guitar business.
Accounting Profit
Economic Profit
Profit
(Dollars)
h
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education