Tim lives in Vancouver and runs a business that sells pianos. In an average year, he receives $733,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $433,000; he also pays wages and utility bills totalling $257,000. He owns his show room; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this show room does not depreciate over the year. Also, if Tim does not operate this piano business, he can work as a paralegal, receive an annual salary of $23,000 with no additional monetary costs, and rent out his show room at the $13,000 per year rate. No other costs are incurred in running this piano business. Tim lives in Vancouver and runs a business that sells pianos. In an average year, he receives $733,000 from selling pianos. Of this sales revenue, hemust pay the manufacturer a wholesale cost of $433,000; he also pays wages and utility bills totalling $257,000. He owns his show room; if hechocses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this show room does not depreciate over the year. Also, if Timdoes not operate this piano business, he can work as a paralegal, receive an annual salary of $23,000 with no additional monetary costs, and rent outhis show room at the $13,000 per year rate. No other costs are incurred in running this piano business.Identify each of Tim's costs in the following table as either an implicit cost or an explicit cost of selling pianos.Implicit CostExplicit CostThe rental income Tim could receive if he chose to rent out his show roomThe wholesale cost for the pianos that Tim pays the manufacturerThe wages and utility bills that Tim paysThe salary Tim could earn if he worked as a paralegalComplete the following table by determining Tim's accounting and economic profit of his piano business.Profit(Dollars)Accounting ProfitEconomic Profit

Explicit costs refers to fixed and variable costs of doing business. Implicit costs are those costs…

Answered: Tim lives in Vancouver and runs a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Tim lives in Vancouver and runs a business that sells pianos. In an average year, he receives $733,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $433,000; he also pays wages and utility bills totalling $257,000. He owns his show room; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this show room does not depreciate over the year. Also, if Tim does not operate this piano business, he can work as a paralegal, receive an annual salary of $23,000 with no additional monetary costs, and rent out his show room at the $13,000 per year rate. No other costs are incurred in running this piano business.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions