Yakov lives in Montreal and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totalling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Yakov does not operate this boat business, he can work as a financial advisor and receive an annual salary of $50,000 with no additional monetary costs. No other costs are incurred in running this boat business. Identify each of Yakov's costs in the following table as either an implicit cost or an explicit cost of selling boats. Implicit Cost Explicit Cost The rental income Yakov could receive if he chose to rent out his showroom The wholesale cost for the boats that Yakov pays the manufacturer The salary Yakov could earn if he worked as a financial advisor The wages and utility bills that Yakov pays Complete the following table by determining Yakov's accounting and economic profit of his boat business. Profit (Dollars) Accounting Profit Economic Profit True or False: Yakov is earning a normal profit. O True O alse

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Yakov lives in Montreal and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue, he
must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totalling $301,000. He owns his showroom; if he
chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if
Yakov does not operate this boat business, he can work as a financial advisor and receive an annual salary of $50,000 with no additional monetary
costs. No other costs are incurred in running this boat business.
Identify each of Yakov's costs in the following table as either an implicit cost or an explicit cost of selling boats.
Implicit Cost
Explicit Cost
The rental income Yakov could receive if he chose to rent out his showroom
The wholesale cost for the boats that Yakov pays the manufacturer
The salary Yakov could earn if he worked as a financial advisor
The wages and utility bills that Yakov pays
Complete the following table by determining Yakov's accounting and economic profit of his boat business.
Profit
(Dollars)
Accounting Profit
Economic Profit
True or False: Yakov is earning a normal profit.
O True
O False
Transcribed Image Text:Yakov lives in Montreal and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totalling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Yakov does not operate this boat business, he can work as a financial advisor and receive an annual salary of $50,000 with no additional monetary costs. No other costs are incurred in running this boat business. Identify each of Yakov's costs in the following table as either an implicit cost or an explicit cost of selling boats. Implicit Cost Explicit Cost The rental income Yakov could receive if he chose to rent out his showroom The wholesale cost for the boats that Yakov pays the manufacturer The salary Yakov could earn if he worked as a financial advisor The wages and utility bills that Yakov pays Complete the following table by determining Yakov's accounting and economic profit of his boat business. Profit (Dollars) Accounting Profit Economic Profit True or False: Yakov is earning a normal profit. O True O False
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 3 images

Blurred answer
Knowledge Booster
Interest rate
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
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education