Definition of economic costs

Hubert lives in Denver and runs a business that sells boats. In an average year, he receives $704,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $404,000; he also pays wages and utility bills totaling $286,000. He owns his showroom; if he chooses to rent it out, he will receive $3,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Hubert does not operate this boat business, he can work as an accountant, receive an annual salary of $20,000 with no additional monetary costs, and rent out his showroom at the $3,000 per year rate. No other costs are incurred in running this boat business.

Identify each of Herbert's costs in the foliowing table as either an implicit cost or an expiicit cost of selling boats. Implicit Cost Explicit Cost The salary Hubert could earn if he worked as an accountant O O The rental income Hubert could receive if he chose to rent out his showroom O O The wages and utility bills that Hubert pays 0 O O O The wholesale cost for the boats that Hubert pays the manufacturer Complete the following table by determining Hubert's accounting and economic profit of his boat business Profit (Dollars) Accounting Profit Economic Profit