Manuel lives in San Francisco and operates a small company selling bikes. On average, he receives $721,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $421,000. He also pays several utility companies, as well as his employees wages totaling $260,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $17,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the bike business, he can work as a nurse and earn a yearly salary of $32,000 with no additional monetary costs, and rent out his storefront at the $17,000 per year rate. There are no other costs faced by Manuel in running this bike company. Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling bikes. The salary Manuel could earn if he worked as a nurse The rental income Manuel could receive if he chose to rent out his showroom The wages that Manuel pays The wholesale cost for the bikes that Manuel pays the manufacturer Implicit Cost Explicit Cost Complete the following table by determining Manuel's accounting and economic profit of his bike business. Accounting Profit Economic Profit Profit (Dollars)
Manuel lives in San Francisco and operates a small company selling bikes. On average, he receives $721,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $421,000. He also pays several utility companies, as well as his employees wages totaling $260,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $17,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the bike business, he can work as a nurse and earn a yearly salary of $32,000 with no additional monetary costs, and rent out his storefront at the $17,000 per year rate. There are no other costs faced by Manuel in running this bike company. Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling bikes. The salary Manuel could earn if he worked as a nurse The rental income Manuel could receive if he chose to rent out his showroom The wages that Manuel pays The wholesale cost for the bikes that Manuel pays the manufacturer Implicit Cost Explicit Cost Complete the following table by determining Manuel's accounting and economic profit of his bike business. Accounting Profit Economic Profit Profit (Dollars)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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economics
Transcribed Image Text:Manuel lives in San Francisco and operates a small company selling bikes. On average, he receives $721,000 per year from selling bikes. Out of this
revenue from sales, he must pay the manufacturer a wholesale cost of $421,000. He also pays several utility companies, as well as his employees
wages totaling $260,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $17,000 in
rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the bike business, he can work as
a nurse and earn a yearly salary of $32,000 with no additional monetary costs, and rent out his storefront at the $17,000 per year rate. There are no
other costs faced by Manuel in running this bike company.
Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling bikes.
The salary Manuel could earn if he worked as a nurse
The rental income Manuel could receive if he chose to rent out his showroom
The wages that Manuel pays
The wholesale cost for the bikes that Manuel pays the manufacturer
Implicit Cost Explicit Cost
Complete the following table by determining Manuel's accounting and economic profit of his bike business.
Accounting Profit
Economic Profit
Profit
(Dollars)
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