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Gita is an auto mechanic and runs a small repair shop. She hires one mechanic at $20,000 per year, pays a monthly rent of $5,000
Gita is an auto mechanic and runs a small repair shop. She hires one mechanic at $20,000 per year, pays a monthly rent of $5,000 towards the lease of the premises where her repair shop is located, and spends $20,000 per year on materials needed for repairing cars and trucks. She has invested $40,000 of her own savings in heavy equipment (air and strut compressors, brake lathes, heavy-duty lifts etc.) that could earn her $4,000 per year if invested elsewhere. She has been offered $40,000 per year by a competitor to work as a mechanic for them and she estimates the value of in come she could earn in her spare time to be $5,000. The repair shop's total annual revenue is $250,000. A. What is Gita's yearly fixed cost? B. What is Gita's yearly variable cost? C. What is Gita's yearly explicit cost? D. What is Gita's yearly implicit cost? E. What is Gita's accounting profit? F. What is Gita's yearly economic profit? G. In the scenario presented in Question M9.07, is Gita making the best use of her resources (time and money) in terms of economic profit? - yes or no
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