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Homework answers / question archive / Sezer gets 10000 TL from his parents as a graduation present and decides to open a small bar that sells only Bomonti beer and Tex-Mex chips
Sezer gets 10000 TL from his parents as a graduation present and decides to open a small bar that sells only Bomonti beer and Tex-Mex chips. He spends all the money to buy a fridge, a washing machine, tables, chairs, beer glasses, and plates for the chips. The monthly rent for the place is 2000 TL. Sezer employs 2 waiters and pays a monthly salary of 1500 TL to each waiter. The pub incurs a cost of 800 TL/month for electricity, and 200 TL/month for water. Sezer buys each bottle of Bomonti beer for 1.5 TL, and each pack of Tex-Mex chips for 2 TL. Each month, he sells 3000 bottles of Bomonti beer at a price of 3 TL, and 2000 packs of Tex-Mex chips at a price of 4 TL.
(A) Explicit cost is the cost which we pay directly to others . Thus, in this case explicut coat includes rent,+waiters payment + electricity bill +water bill+ Equipment costs + Raw material /inventory costs.
Explicit cost =10000+2000+2(1500)+800+200+ 1.5(3000) +2(2000) = 24500TL
(B) the total revenue of SEZER'S bar is calculated by totalling the amount of Bomonti beer and Tex -mex chips she sold.
Thus, total revenue = 3(3000) +4(2000)=17000 TL.
(c) to calculate the economic profit we take into consideration the implicit cost ,explicit cost and total revenue. Or we can say that,
Economic profit = Total revenue - Total cost
= 17000 TL -( explicit cost + implicit cost )
Where implicit cost is the cost or payments made to owner for using his own factor of productions.This implicit cost takes the value of best opportunity forgone. In present case., if sezer purchased govermenta bonds then he would get 5% of 10000 = 500
And if she does job then she gets 3000TL.
Thus the best opportunity forgone is of 3000 TL. Thus implicit cost is 3000 TL.
And economic profit =17000-24500-3000
=-10500( there is loss)
