Question

Jen runs a martial arts club. She now has 60 trainees who pay monthly dues of $150. Every month she pays $2,000 in miscellaneous club-related expenditures including utilities, accounting services, etc. To run the club she quit her day job where she used to earn $5,000/month. She does not pay herself a salary for her time spent at the club. She runs the club from the first floor of her mother's house (a famous martial arts teacher herself). Her mother insisted that they make the arrangement official. As a result, Jen pays her mother $2,000/month for using the space. Using this information answer the following questions: • Her monthly economic cost is $ 13000 • Her monthly accounting cost is $ 9000 • Her monthly economic profit is $ 0 • Her monthly accounting profit is $ 5000 Check Next page

Answer 1

Total Revenue Explicit Cost -Economic Profit + Impliut Cost A ccounting Profit Total Revenue Expliuit Cast -Economic Cost Explicit + Implicit Coct -Auounting Cost is only Explicit Cort ohich i's given to fatrns ohich are hired. IMpliit Cort the, Cast Crfactor owne opportunity Ownn Totw Revenve- Expli cit Cost Miscell aneow Rent paid to Mothen 2 000 + 2000 Implicit Cost Copp CoPportunity Cot ot henself) 5too E conomic Cost= Gevo (only Explicit) AcLounting Cast E con omic proht Gon- 96t Accounhing Prifit Sooo