help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive /  Ralph owns a small pizza restaurant, where he works full-time in the kitchen

 Ralph owns a small pizza restaurant, where he works full-time in the kitchen

Economics

 Ralph owns a small pizza restaurant, where he works full-time in the kitchen. His total revenue is $100,000 a year, and his rent is $36,000 a year. He pays his one employee $24,000 a year, and the cost of ingredients and overhead averages $60,000 a year. Also, Ralph forgoes $35,000 per year as the manager of a competing pizza restaurant nearby. His economic profit for the year was: 
0 $55,000. 0 -$55,000. 
0 -$20,000. 
0 $20,000. 0 $34,000. 
 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of Economic Profit:

Economic Profit= Total Revenue-Explicit Costs-Implicit Costs

Here,

Total Rent paid=$36000
Total employee payment=$24000
Total ingredient and overhead=$60000

Explicit Costs=36000+24000+60000=$120000
Implicit Costs=The opportunity cost of not working as a manager=$35,000


Economic Profit =100,000-(120000)-(35000) =-$55,000

So, the correct option is 2nd -"$55,000".

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)

Related Questions