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Dmitri lives in Dallas and runs a business that sells pianos. In an average year, he receives $722,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. He owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Dmitri does not operate this piano business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. No other costs are incurred in running this piano business. Identify each of Dmitri's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Dmitri pays The rental income Dmitri could receive if he chose to rent out his showroom The wholesale cost for the pianos that Dmitri pays the manufacturer The salary Dmitri could earn if he worked as a paralegal Complete the following table by determining Dmitri's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit

Dmitri lives in Dallas and runs a business that sells pianos. In an average year, he receives $722,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. He owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Dmitri does not operate this piano business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. No other costs are incurred in running this piano business. Identify each of Dmitri's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Dmitri pays The rental income Dmitri could receive if he chose to rent out his showroom The wholesale cost for the pianos that Dmitri pays the manufacturer The salary Dmitri could earn if he worked as a paralegal Complete the following table by determining Dmitri's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.7P
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Dmitri lives in Dallas and runs a business that sells pianos. In an average year, he receives $722,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. He owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Dmitri does not operate this piano business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. No other costs are incurred in running this piano business. Identify each of Dmitri's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Dmitri pays The rental income Dmitri could receive if he chose to rent out his showroom The wholesale cost for the pianos that Dmitri pays the manufacturer The salary Dmitri could earn if he worked as a paralegal Complete the following table by determining Dmitri's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit
Transcribed Image Text:Dmitri lives in Dallas and runs a business that sells pianos. In an average year, he receives $722,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. He owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Dmitri does not operate this piano business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. No other costs are incurred in running this piano business. Identify each of Dmitri's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Dmitri pays The rental income Dmitri could receive if he chose to rent out his showroom The wholesale cost for the pianos that Dmitri pays the manufacturer The salary Dmitri could earn if he worked as a paralegal Complete the following table by determining Dmitri's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit
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