Which of your current costs are implicit

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Reference no: EM13198845

Suppose you own a restaurant that serves only dinners. You are trying to decide whether or not or rent out your dinning room and kitchen during mornings to another firm, the Breakfast Club Inc., that will serve only breakfast. Your restaurant currently has the following monthly costs:

Rent of building: $2,000
Electricity: $1,000
Wages and Salaries: $15,0000
Advertising: $2,000
Purchases of food and supplies: $8,000
Your foregone labor income: $4,000
Your foregone interest: $1,000

a.) Which of your current costs are implicit, and which are explicit?

b.) Suppose the breakfast club inc offers to pay $800 per month to use the building. They promise to use only their food, and also to leave the place spotless when they leave each day. If you believe them, should you rent out your restaurant to them? Explain.

Reference no: EM13198845

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