Business, 03.04.2020 15:36 kayladgranger

Rob Reiner, a musician by profession, is planning to open a musical instruments store. He estimates that his monthly expenses for operating this store would include $5,000 for wages to the sales and accounts staff, electricity charges worth $1,500, rent of $5,000, and maintenance charges of $400. To start this store, Rob would have to give up his present job as a piano teacher, which pays him $2,000 per month. Additionally, he will also have to borrow $25,000 from the bank to purchase the basic furniture and instruments for the store. Based on the current lending rate, the interest payment on this loan works out to $100 every month. Rob estimates that his monthly economic profit from the sale of musical instruments worth $16,000 will be $4,000 While estimating his economic profit, Rob is ignoring the factthat:

A. an increase in the demand for a commodity often results in an increase in its price.
B. the opportunity cost of opening the store is positive.
C. certain costs remain fixed in the short run.
D. interest rates on deposits are lower than the interest charged on loans.
E. the salaries of the sales staff are part of the fixed costs

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Rob Reiner, a musician by profession, is planning to open a musical instruments store. He estimates...

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