=.. eh - home l'i'l i-i ouuz-EC:[1-:I)i- , MIi'idTap-Cei'igage learning + C ng.cenga _ orn * El Back to Assignment Attempts |:I:I:| Keep the Highest l 2 2. Definition of economic costs Paolo lives in San Diego 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 $256,000. 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 Paolo 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 busmess. Identify each of Paolo's costs in the following table as either an implicit cost or an explicit cost of selling boats. Implicit Cost Explicit Cost The wholesale cost for the boats that Paolo pays the manufacturer T e wages and utility bills that Paolo pays 0 O T e salary Paolo could earn it he worked as an accountant O O T e rental income Paolo could receive if he chose to rent out his showroom O O Complete the followmg table by determining Paolo's accounting and economic prot of his boat business. Prot (Dollars) Accounting Profit |:| Economic Prot |:| Grade It Now Save 8. Connue 7' D I .l {J H '7 w ' a