Question

Bob used to earn $35,000 a year, selling real estate, but he now sells art supplies The return to entrepreneurship in the art supplies industry is $25,000 a year. Over the year, Bob bought $15,000 worth of supplies from manufacturers of art supplies and sold these supplies for $59,000 Bob rents a shop for $5,000 a year and spends $1,400 on utilities and office expenses. Bob owns a cash register, which he bought for $2,500 with funds from his savings account. The bank pays 4 percent a year on savings accounts At the end of the year, Bob was offered $1,700 for his cash register. dollars Bob has explicit costs of

Answer 1

Explicit costs are the dollar costs which are actually incurred in the course of a business.

Here, total explicit costs = costs of supplies + rent + utilities + net cost of the cash register = $15,000 + $5,000 + $1,400 + ($2,500 - $1,700) = $15,000 + $5,000 + $1,400 + $800 = $22,200.

Answer: $22,200.