John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of deliciouspastries and bread, and his business has been quite successful. John used to work as a manager in a nearbyrestaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $25,000. Toassess the overall performance of his bakery, John meticulously tracks his financials. For the year 2023,John has gathered the following information:NB:Total revenue from pastry and bread sales: $100,000.Cost of ingredients and materials: $30,000Rent for the bakery space: $12,000Wages paid to his employees: $20,000Advertising expenses: $5,000The bakery space could be rented out for $10,000 per year if John did not use it for his bakery.John invested $40,000 of his personal savings into the bakery when he started it. These savings couldhave earned him a 5% annual interest in a bank savings account.Calculate John's economic profit for the year 2023.a) $8,000b) $6,000c)-$4,000d) $-2,000

Explicit cost is the actual monetary expenditure incurred to run a business. Implicit cost is the…

John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of delicious pastries and bread, and his business has been quite successful. John used to work as a manager in a nearby restaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $25,000. To assess the overall performance of his bakery, John meticulously tracks his financials. For the year 2023, John has gathered the following information: Total revenue from pastry and bread sales: $100,000. Cost of ingredients and materials: $30,000 Rent for the bakery space: $12,000 Wages paid to his employees: $20,000 Advertising expenses: $5,000

John runs a small bakery in his neighbourhood, John's Delightful Bakery. He bakes a variety of delicious pastries and bread, and his business has been quite successful. John used to work as a manager in a nearby restaurant before starting his bakery, and he quit his job to focus on the bakery. His salary was $25,000. To assess the overall performance of his bakery, John meticulously tracks his financials. For the year 2023, John has gathered the following information: Total revenue from pastry and bread sales: $100,000. Cost of ingredients and materials: $30,000 Rent for the bakery space: $12,000 Wages paid to his employees: $20,000 Advertising expenses: $5,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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