A Modern furniture company can make ten bedroom sets per year. The price per bedroom set is $25000. Total cost is $150,000 for the raw materials (wood, paint etc) to build the ten bedrooms sets. The owner of the company has invested $400,000 in the factory: $200,000 from his own savings and $200,000 borrowed from bank at 10 percent interest. The owner of the firm can work at a competing furniture factory for $70,000 per year.

What are the explicit costs the owner of the firm incurring while producing ten bedrooms sets?

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What are the total opportunity costs of producing ten bedrooms sets (explicit and implicit)?

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What is the accounting profit of the company?

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What is the economic profit of the company?

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