Question
Carlos lives in Denver and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue,
Carlos lives in Denver and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Carlos does not operate this boat business, he can work as a financial advisor and receive an annual salary of $50,000 with no additional monetary costs. No other costs are incurred in running this boat business.
Identify each of Carlos's costs in the following table as either an implicit cost or an explicit cost of selling boats.
Complete the following table by determining Carlos's accounting and economic profit of his boat business. Accounting Profit =? Economic Profit =?
Alternatively, the economic profit he would earn asa financial advisorwould be
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