Please include explicit costs in dollars, implicit costs in dollars and economic
ID: 1117546 • Letter: P
Question
Please include explicit costs in dollars, implicit costs in dollars and economic profit in dollars and show how you found them. Homework: Homework 9 (Ch 14) Score: 0 of 5 pts 3Instructor Assignable 2 1 of 18 (18 complete) Hw Score: 94.68%, 8g Question H Ken used to earn $20,000 a year, selling real estate, but he now sells children's shoes. The return to entrepreneurship in the children's shoes industry is $18,000 a year. Over the year, Ken bought $9,000 worth of shoes from manufacturers of children's shoes and sold these shoes for $40,000. Ken rents a shop for $6,000 a year and spends $1,500 on utilities and office expenses. Ken owns a cash register, which he bought for $2,200 with funds from his savings account. The bank pays 3 percent a year on savings accounts At the end of the year, Ken was offered $1,400 for his cash register Ken has explicit costs of dollars. ols Enter your answer in the answer box and then click Check Answer Check Answer Clear All remainingExplanation / Answer
Explicit costs = change in income by switching to selling shoes + interest foregone
Explicit cost = 2000+0.03*2200+600
= $2666
Implicit cost = Expenditure on shoes+ rent+ Expenses made on utilities+ cost of register
Implicit cost = 9000+6000+1500+2200
= $18700
Economic Profit = Total revenue –(Implicit +Explicit costs)