A man managing a restaurant for $20,000 per year decides to open his own diner. His revenue during the first year of operation is $110,000, and his expenses are as follows: Salaries, $55,000; Supplies $11,000; Rent, $9,000; and Utilities, $1,500. He financed the diner with a loan of $70,000 at a 5% interest rate. Calculate: a. explicit costs b. implicit costs c. business profit d. economic profit

A man managing a restaurant for $20,000 per year decides to open his own diner. His revenue during the first year of operation is $110,000, and his expenses are as follows: Salaries, $55,000; Supplies $11,000; Rent, $9,000; and Utilities, $1,500. He financed the diner with a loan of $70,000 at a 5% interest rate. Calculate: a. explicit costs b. implicit costs c. business profit d. economic profit

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter22: Getting Divisions To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 22.3IP

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How to Determine "Accounting Profit"