Tools ips 1. Definition of economic costs Carlos lives in Dallas and operates a small company selling bikes. On average, he receives $833,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $464,000. He also pays several utility companies, as well as his employees wages totaling $278,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $68,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Carlos does not operate the bike business, he can work as a programmer and earn a yearly salary of $34,000 with no additional monetary costs, and rent out his storefront at the $68,000 per year rate. There are no other costs faced by Carlos in running this bike company. M Identify each of Carlos costs in the following table as either an impicit cost or an explicit cost of selling bikes Implicit Cost Explicit Cost O O O O The wholesale cost for the bikes that Carlos pays the manufacturer The rental income Carlos could receive if he chose to rent out his showroom The salary Carlos could earn if he worked as a programmer The wages that Carlos pers 0 Complete the following table by determining Carlos's accounting and economic profit of his bike business Profit (Dollars) Accounting Prent
Tools ips 1. Definition of economic costs Carlos lives in Dallas and operates a small company selling bikes. On average, he receives $833,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $464,000. He also pays several utility companies, as well as his employees wages totaling $278,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $68,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Carlos does not operate the bike business, he can work as a programmer and earn a yearly salary of $34,000 with no additional monetary costs, and rent out his storefront at the $68,000 per year rate. There are no other costs faced by Carlos in running this bike company. M Identify each of Carlos costs in the following table as either an impicit cost or an explicit cost of selling bikes Implicit Cost Explicit Cost O O O O The wholesale cost for the bikes that Carlos pays the manufacturer The rental income Carlos could receive if he chose to rent out his showroom The salary Carlos could earn if he worked as a programmer The wages that Carlos pers 0 Complete the following table by determining Carlos's accounting and economic profit of his bike business Profit (Dollars) Accounting Prent
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Definition of economic costs
Carlos lives in Dalles and operates a small company selling bikes. On average, he receives $833,000 per year from selling bikes. Out of this revenue
from sales, he must pay the manufacturer a wholesale cost of $464,000. He also pays several utility companies, as well as his employees wages
totaling $278,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $68,000 in rent.
Assume there is no depreciation in the value of his property over the year. Further, if Carlos does not operate the bike business, he can work as a
programmer and earn a yearly salary of $34,000 with no additional monetary costs, and rent out his storefront at the $68,000 per year rate. There
are no other costs faced by Carlos in running this bike company.
b
Identify each of Carlos's costs in the following table as either an implicit cost or an explicit cost of selling bikes
Implicit Cost
Explicit Cost
O
The wholesale cost for the bikes that Carlos pays the manufacturer
The rental income Carlos could receive if he chose to rent out his showroom
The salary Carlos could earn if he worked as a programmer
The wages that Carlos pays
0
Accounting Prefit
Economic Prof
OO
Complete the following table by determining Carlos's accounting and economic profit of his bike business
Profit
(Dollars)
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