Question

met can contain viruses. Unless you need to edit, it's safer to stay in Protected View Enable Editing Alex quit his job at State University where he earmed $45,000 a year to start extreme gaming software business To start the business, he cashed in $100,000 in bonds that was earning him 10 percent interest anmually to buy equipment. His forgone entrepreneurial income was $5,000 a year. In the first year, the fim sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. Refer to the above information and list the items that makes the explicit cost and calculate total the explicit costs of 1 the firm in the first year: (Spoints) 2. Refer to the above information, and list the items that makes the implicit cost and calculate the total implicit costs of the firm in the first year: (6points) How much economic profit did Alex make in the first year were. 3. Refer to the above information (10points) DPocus F12 F10 FS & % 6 5 3 P U Y CO 7 4

Answer 1

Total Revenue = 11,000 vnitt sold at $750 each = 11,000 $ 75= $825,000 Explicit cost = 11,000 vrch at $55 $55 goes to cost of production, packaging, marketing, eti are the explicit cost or accounting cost Total Explicit cost = 11,000 x 855= $605,000 1. Total Explicit cost $605,000 2 Total Implicit cost Implint lost includes (a) Salary of the job quit = 45,000 (6) britenest on bonds 10% on 100,000 - 100do 6 targone entrepreneurial talent = 5,000 Total Implicit cost $60,000 3. Calculate Economic cost Economic cost Explicit cost & Implicit cost - $ 605,000 + $60000 = $665,000 Economic profit - Total Revenue - Total Economic Cost = $825,000 - $665,000 - $160,000