A small coffee house has the following costs: building and pizza oven rentals 100,000 labor 120,000 owners salary given up 85,000 value of entrepreneurial talent 30,000 raw material 100,000 Bank loan payment 15,000 interest given up by owner 5,000 revenue for the firm is expected to be 420,000 for the year. a. List by name and amount the firms fixed explicit costs b. List by name and amount the forms variable explicit costs c. List by name and amount the forms implicit cost
A small coffee house has the following costs: building and pizza oven rentals 100,000 labor 120,000 owners salary given up 85,000 value of entrepreneurial talent 30,000 raw material 100,000 Bank loan payment 15,000 interest given up by owner 5,000 revenue for the firm is expected to be 420,000 for the year. a. List by name and amount the firms fixed explicit costs b. List by name and amount the forms variable explicit costs c. List by name and amount the forms implicit cost
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter22: Getting Divisions To Work In The Firm’s Best Interests
Section: Chapter Questions
Problem 3MC
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A small coffee house has the following costs:
building and pizza oven rentals 100,000
labor 120,000
owners salary given up 85,000
value of entrepreneurial talent 30,000
raw material 100,000
Bank loan payment 15,000
interest given up by owner 5,000
revenue for the firm is expected to be 420,000 for the year.
a. List by name and amount the firms fixed explicit costs
b. List by name and amount the forms variable explicit costs
c. List by name and amount the forms implicit cost
d. Calculate the firms accounting profits and its economic profit
e. Should the firms continue business in the long term if revenues and costs continue at the same lev? Why or why not?
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