what are Jo’s explicit costs, accounting profit, implicit costs, economic profit
ID: 1121770 • Letter: W
Question
what are Jo’s explicit costs, accounting profit, implicit costs, economic profit 10. Jo quit her job at where she earned $85,000 a year. She cashed in $200,000 in corporate bonds that earned 3% interest annually to set up a gym. Jo has decided to buy a store front and set up exercise classes. There are 800 people who will pay $1000 a year for unlimited classes; $700 from each person goes for instructors maintenance, equipment, insurance, depreciation etc. Write your answers to the following questions on the answer sheet. 2017 Joanne Spitz A. Whotare e's total revenues? (3 pts)-geo, 6ro B. What are Jo's explicit costs? In numbers (3 pts) C. What is her accounting profit? Numbers (3 pts) D. List 2 important implicit costs that Jo has not included. ( in numbers 3 pts) E. Whot is Jo's pure economic profit (lossjnumbers? (3 pts n 719,30oExplanation / Answer
Total revenue is 1000 $800= $800,000,
Explicit costs (that require actual money outflow) = $700 x 1000 = $700,000
Accounting profit = Revenue- explicit costs = $800,000 - $700,000 = $100,000
Implicit costs are opportunity costs that do not require actual monetary outflow= 1) Salary foregone ($85,000) and 2) interest on bond. (3% of 200,000).
Economic profit = Revenue - explicit costs - implicit costs = $800,000 - $700,000 -($85,000 + $6000) = $9000
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