Brian lives in New York City and runs a business that sells pianos. In an average year, he receives $726,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $426,000; he also pays wages and utility bills totaling $264,000. He owns his showroom; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this piano business, he can work as a paralegal and receive an annual salary of $22,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Brian's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The rental income Brian could receive if he chose to rent out his showroom The wholesale cost for the pianos that Brian pays the manufacturer The salary Brian could earn if he worked as a paralegal The wages and utility bills that Brian pays O ooo

Brian lives in New York City and runs a business that sells pianos. In an average year, he receives $726,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $426,000; he also pays wages and utility bills totaling $264,000. He owns his showroom; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this piano business, he can work as a paralegal and receive an annual salary of $22,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Brian's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The rental income Brian could receive if he chose to rent out his showroom The wholesale cost for the pianos that Brian pays the manufacturer The salary Brian could earn if he worked as a paralegal The wages and utility bills that Brian pays O ooo

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 14E

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