Business, 12.04.2021 21:30 yessijessiHaley

Joe want to open a bakery that sells cupcakes. He already owns a building and could have rented out his building for $15,000 but instead he decides to forgo that rent and use the building for his bakery. Joe has a savings account of $50,000 that was earning him an interest of $1,000. He decides to close that account and forgo the interest. He uses his savings to invest in ovens and fridges. Joe is currently an entrepreneur in a business that makes sandwiches. His accounting profits in this business is $38,000. He wants to quit being an entrepreneur in this business, meaning he will forgo this profit. He does his research and estimates that his yearly revenues will be $100,000. He also finds out that the cost of ingredients will be $20,000, his utility bills will be $5,000, and the cost of hiring workers will be $35,000. Required:
a. List Joe's explicit costs and how much are they?
b. List his implicit costs and how much are they?
c. How much is the Accounting profit?
d. How much is the Economic profit?
e. What do you advise Joe to do. open the cupcake or stay in his current sandwich business? Why?

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Joe want to open a bakery that sells cupcakes. He already owns a building and could have rented out...

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