Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 7, Problem 6SQ
To determine
The explicit cost for the owner of the sushi bar.
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Marty used to be a bartender making $5,000 a year but he quit in order to become a clown that does shows at birthday parties. His clown car and costumes cost $7,000 and he did a lot of shows in the past year, making $13,000 in revenue but paying $2,000 in variable costs for balloons, gas, etc. Marty asked an accountant and an economist to calculate his profit. What did they report?
Francis wants to buy some paintings for their store to make it feel more classy. Francis would need to take $20,000 out of their savings account (which earns 1% interest a year) in order to finance the paintings. At the end of the year, Francis knows they could sell the paintings for $20,000 but they would choose not to. When calculating this year's economic profit, Francis would count this as a:
a.
explicit cost of $20,000 and an implicit cost of $2,000.
b.
explicit cost of $20,000 and an implicit cost of $20,000.
c.
explicit cost of $20,000.
d.
implicit cost of $2,000.
Until recently, Mark worked as a financial advisor, earning $65,000 annually. Then he inherited a piece of commercial real estate that had been renting for $14,000 annually. Mark decided to leave his job and operate a sea food restaurant in the space he inherited. At the end of the first year, his books showed total revenues of $300,000, and paid a total cost of $200,000 for food, utilities, cooks, and other supplies: Show all your work including formulas learned to support your answer for each of the following:
A) Calculate his explicit costs:
B) Calculate his implicit costs.
C) Calculate his accounting profits.
D) Calculate his economic profits.
Chapter 7 Solutions
Economics For Today
Ch. 7.5 - Prob. 1YTECh. 7 - Prob. 1SQPCh. 7 - Prob. 2SQPCh. 7 - Prob. 3SQPCh. 7 - Prob. 4SQPCh. 7 - Prob. 5SQPCh. 7 - Prob. 6SQPCh. 7 - Prob. 7SQPCh. 7 - Prob. 8SQPCh. 7 - Prob. 9SQP
Ch. 7 - Prob. 10SQPCh. 7 - Prob. 11SQPCh. 7 - Prob. 1SQCh. 7 - Prob. 2SQCh. 7 - Prob. 3SQCh. 7 - Prob. 4SQCh. 7 - Prob. 5SQCh. 7 - Prob. 6SQCh. 7 - Prob. 7SQCh. 7 - Prob. 8SQCh. 7 - Prob. 9SQCh. 7 - Prob. 10SQCh. 7 - Prob. 11SQCh. 7 - Prob. 12SQCh. 7 - Prob. 13SQCh. 7 - Prob. 14SQCh. 7 - Prob. 15SQCh. 7 - Prob. 16SQCh. 7 - Prob. 17SQCh. 7 - Prob. 18SQCh. 7 - Prob. 19SQCh. 7 - Prob. 20SQCh. 7 - Prob. 21SQCh. 7 - Prob. 22SQCh. 7 - Prob. 23SQCh. 7 - Prob. 24SQCh. 7 - Prob. 25SQ
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