Chris P. Nugget runs a small fast-food chicken restaurant named "Poultrygeist.". He hires oneemployee at a cost of $28,000 per year, pays annual rent of $25,000 for his shop, and spends $75,000per year on other inputs (food, supplies, etc.). He has $100,000 of his own funds previously investedin equipment (ovens, serving counters, etc.) that could earn him $8,000 per year if these funds werealternatively invested. Chris has been offered $80,000 per year to work as a restaurant manager for acompetitor. Total annual revenue from the restaurant is $200,000. For all answers, be specific andshow your work.a. How much are Mr. Nugget's "explicit costs" this year?b. How much are Mr. Nugget's "implicit costs" this year?c. What is Mr. Nugget's "accounting profit" this year?d. What is Mr. Nugget's "economic profit" this year?e. Put into words what your answer to part d. means for Mr. Nugget's decision about whether to stayat his restaurant or to close and take the offer at his competitor's place.

Explicit costs are the direct, out-of-pocket payments made to others during the course of running a…

Answered: Chris P. Nugget runs a small fast-food…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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