Reference no: EM13259060
A women managing a photocopying establishment for $25,000 per year decides to open her own duplicating place. Her revenue during the first year of operation is$120,000, and her expenses are as follows: Salaries to hired help $45,000 Supplies 15,000 Rent 10,000 Utilities 1,000 Interest on bank loan 10,000
(a) The explicit costs are $81,000.
(b) The implicit costs are equal to $25,000.
(c) The business profit equals total revenue minus the explicit costs $120,000 - $8l, 000 = $39,000.
(d) The economic profit equals total revenues minus the explicit and implicit costs $120,000 - $106,000 = $14,000.
(e) The normal return on investment equals the implicit costs of the entrepreneur of $25,000.
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