Definition of economic costs Manuel lives in Chicago and operates a small company selling drones. On average, he receives $702,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $402,000. He also pays several utility companies, as well as his employees wages otaling $279,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $8,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can work as a programmer and earn a yearly salary of $20,000 with no additional monetary costs, and rent out his storefront at the $8,000 per year rate. There are no other costs faced by Manuel in running this drone company. Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost O The wages that Manuel pays The salary Manuel could earn if he worked as a programmer The wholesale cost for the drones that Manuel pays the manufacturer The rental income Manuel could receive if he chose to rent out his showroom οι οι ο O OO O 72"F1. Definition of economic costsManuel lives in Chicago and operates a small company selling drones. On average, he receives $702,000 per year from selling drones. Out of thisrevenue from sales, he must pay the manufacturer a wholesale cost of $402,000. He also pays several utility companies, as well as his employeeswaget otaling $279,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $8,000 inrent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can workas a programmer and earn a yearly salary of $20,000 with no additional monetary costs, and rent out his storefront at the $8,000 per year rate. Thereare no other costs faced by Manuel in running this drone company.Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling drones.Implicit CostExplicit CostOOOThe wages that Manuel paysThe salary Manuel could earn if he worked as a programmerThe wholesale cost for the drones that Manuel pays the manufacturerThe rental income Manuel could receive if he chose to rent out his showroomOO

Explicit cost is the actual monetary expenditure to run the business. Implicit cost is the…

Answered: Definition of economic costs Manuel…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter20: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 2CQ

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Definition of economic costs Manuel lives in Chicago and operates a small company selling drones. On average, he receives $702,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $402,000. He also pays several utility companies, as well as his employees wages otaling $279,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $8,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can work as a programmer and earn a yearly salary of $20,000 with no additional monetary costs, and rent out his storefront at the $8,000 per year rate. There are no other costs faced by Manuel in running this drone company. Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost O The wages that Manuel pays The salary Manuel could earn if he worked as a programmer The wholesale cost for the drones that Manuel pays the manufacturer The rental income Manuel could receive if he chose to rent out his showroom οι οι ο O OO O

72"F
1. Definition of economic costs
Manuel lives in Chicago and operates a small company selling drones. On average, he receives $702,000 per year from selling drones. Out of this
revenue from sales, he must pay the manufacturer a wholesale cost of $402,000. He also pays several utility companies, as well as his employees
waget otaling $279,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $8,000 in
rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can work
as a programmer and earn a yearly salary of $20,000 with no additional monetary costs, and rent out his storefront at the $8,000 per year rate. There
are no other costs faced by Manuel in running this drone company.
Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling drones.
Implicit Cost
Explicit Cost
O
O
O
The wages that Manuel pays
The salary Manuel could earn if he worked as a programmer
The wholesale cost for the drones that Manuel pays the manufacturer
The rental income Manuel could receive if he chose to rent out his showroom
O
O

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