Marius resigned at a place that paid him 85,000 a year. He converted 200,000 in

Question

Marius resigned at a place that paid him 85,000 a year. He converted 200,000 in corporate bonds that earned 3% interest yearly. Marius decided to purchase a place for people to learn a craft. There are 800 people who are willing to pay 1000 annually for classes. 700 of 1000 per person goes for materials the building may need and to pay teachers.
what are his total revenues? explicit costs? (numerical value) accounting profit? (numerical value) 2 important implicit costs that marius perhaps left out (numerical value) pure economic profit? (numerical value)
Marius resigned at a place that paid him 85,000 a year. He converted 200,000 in corporate bonds that earned 3% interest yearly. Marius decided to purchase a place for people to learn a craft. There are 800 people who are willing to pay 1000 annually for classes. 700 of 1000 per person goes for materials the building may need and to pay teachers.
what are his total revenues? explicit costs? (numerical value) accounting profit? (numerical value) 2 important implicit costs that marius perhaps left out (numerical value) pure economic profit? (numerical value)

what are his total revenues? explicit costs? (numerical value) accounting profit? (numerical value) 2 important implicit costs that marius perhaps left out (numerical value) pure economic profit? (numerical value)
what are his total revenues? explicit costs? (numerical value) accounting profit? (numerical value) 2 important implicit costs that marius perhaps left out (numerical value) pure economic profit? (numerical value)

Explanation / Answer

Total Revenue = Bond Interest + Craft Class Income

= 6000 (200,000 * 3% ) + 240000 ( 800 * 300 {1000 fees - 700 cost} )

Total revenue   = 2,46,000

Explicit cost = cost of materials, building and teacher

= 560,000 ( 700 * 800)

Accounting Profit = Profit from Craft Class which is 300 per person. There are 800 people so total accounting profit is 240,000 ( 300 * 800)

Implicit cost is his existing job where he was getting 85,000 a year. Building and Teacher cost. This amount could have deposited in bank and earn 3% interest

so Total Implicit cost = 85000 + 16800 (560000 * 3% ) = 101800

Pure Economic profit = Explicit Profit - Implicit cost

= 240,000 - 101800

= 339800

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