Homework Help is Here – Start Your Trial Now!
Business
Economics
Gilberto lives in Detroit and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this piano business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom at the $15,000 per year rate. No other costs are incurred in running this piano business. Identify each of Gilberto's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wholesale cost for the pianos that Gilberto pays the manufacturer The salary Gilberto could earn if he worked as a financial advisor The rental income Gilberto could receive if he chose to rent out his showroom The wages and utility bills that Gilberto pays Complete the following table by determining Gilberto's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit O0o O

Gilberto lives in Detroit and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this piano business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom at the $15,000 per year rate. No other costs are incurred in running this piano business. Identify each of Gilberto's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wholesale cost for the pianos that Gilberto pays the manufacturer The salary Gilberto could earn if he worked as a financial advisor The rental income Gilberto could receive if he chose to rent out his showroom The wages and utility bills that Gilberto pays Complete the following table by determining Gilberto's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit O0o O

Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter5: Buying The Necessities
Section: Chapter Questions
Problem 4AA
See similar textbooks
icon
Related questions
Question

I need help.

Gilberto lives in Detroit and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this piano business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom at the $15,000 per year rate. No other costs are incurred in running this piano business. Identify each of Gilberto's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wholesale cost for the pianos that Gilberto pays the manufacturer The salary Gilberto could earn if he worked as a financial advisor The rental income Gilberto could receive if he chose to rent out his showroom The wages and utility bills that Gilberto pays Complete the following table by determining Gilberto's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit O0o O
Transcribed Image Text:Gilberto lives in Detroit and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this piano business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom at the $15,000 per year rate. No other costs are incurred in running this piano business. Identify each of Gilberto's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wholesale cost for the pianos that Gilberto pays the manufacturer The salary Gilberto could earn if he worked as a financial advisor The rental income Gilberto could receive if he chose to rent out his showroom The wages and utility bills that Gilberto pays Complete the following table by determining Gilberto's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit O0o O
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Government Policy
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
Economics
ISBN:
9780078747663
Author:
McGraw-Hill
Publisher:
Glencoe/McGraw-Hill School Pub Co
SEE MORE TEXTBOOKS