ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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A small coffee house has the following costs:
building and pizza oven rentals 100,000
labor 120,000
owners salary given up 85,000
value of entrepreneurial talent 30,000
raw material 100,000
Bank loan payment 15,000
interest given up by owner 5,000
revenue for the firm is expected to be 420,000 for the year.
a. List by name and amount the firms fixed explicit costs
b. List by name and amount the forms variable explicit costs
c. List by name and amount the forms implicit cost
d. Calculate the firms accounting profits and its economic profit
e. Should the firms continue business in the long term if revenues and costs continue at the same lev? Why or why not?
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