Business, 30.03.2020 20:25 rosemary909
Dmitri lives in Detroit and runs a business that sells guitars. In an average year, he receives $701,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $420,000; he also pays wages and utility bills totaling $247,000. He owns his showroom; if he chooses to rent it out, he will receive $9,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Dmitri does not operate this guitar business, he can work as a financial advisor and receive an annual salary of $32,000 with no additional monetary costs. No other costs are incurred in running this guitar business.
Required:
1. Identify each of Dmitri's costs in below as either an implicit cost or an explicit cost of selling guitars.
O The wages and utility bills that Dmitri pays
O The wholesale cost for the guitars that Dmitri pays the manufacturer
O The rental income Dmitri could receive if he chose to rent out his showroom
O The salary Dmitri could earn if he worked as a financial advisor
Answers: 1
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Dmitri lives in Detroit and runs a business that sells guitars. In an average year, he receives $701...
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