Question

4. Suppose that last year you started your own brewery. You had $90,000 in explicit costs, which included the wages you paid your employees and the costs associated with the purchase of the ingredients that went into making your beer. You also incurred $61,000 in implicit costs, which included the $50,000 salary ou were earning before you left your previous job to start the brewery business. Over the course of the year, you sold 20,000 bottles of beer at an average price of $10 each. a. What was your accounting profit last year? b. What was your economic profit? c. Given your answer to (b), evaluate your decision to continue operating your brewery this year d. What if this year, due to increased competition from other artisan brewers, you only sold 15,000 bottles of beer at an average price of $8. Your explicit costs decrease to $70,000 but your implicit costs do not change. a. What is your accounting profit this year? b. What is your economic profit this year? (b), evaluate your decision to continue operating your brewery c. Given your answer to this year