Y7

Gilberto lives in New York City and operates a small company selling scooters. On average, he receives $712,000 per year from selling scooters. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $412,000. He also pays several utility companies, as well as his employees wages totaling $269,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $1,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Gilberto does not operate the scooter business, he can work as a nurse and earn a yearly salary of $21,000 with no additional monetary costs, and rent out his storefront at the $1,000 per year rate. There are no other costs faced by Gilberto in running this scooter company. Identify each of Gilberto's costs in the following table as either an implicit cost or an explicit cost of selling scooters. Implicit Cost Explicit Cost The wages that Gilberto pays O O The rental income Gilberto could receive if he chose to rent out his showroom O O The wholesale cost for the scooters that Gilberto pays the manufacturer O O The salary Gilberto could earn if he worked as a nurse O O Complete the following table by determining Gilberto's accounting and economic profit of his scooter business. Profit (Dollars) Accounting Profit Economic Profit