Apila week 12 1 Definition of economic costs Gilberto lives in San Francisco

# Apila week 12 1 definition of economic costs gilberto

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Apila week 121. Definition of economic costsGilberto lives in San Francisco and runs a business that sells boats. In an average year, he receives \$724,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of \$424,000; he also pays wages and utility bills totaling \$266,000. He owns his showroom; if he chooses to rent it out, he will receive \$4,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this boat business, he can work as a paralegal, receive an annual salary of \$21,000 with no additional monetary costs, and rent out his showroom at the \$4,000 per year rate. No other costs are incurred in running this boat business.Identify each of Gilberto's costs in the following table as either an implicit cost or an explicit costof selling boats.Implicit CostExplicit CostThe wholesale cost for the boats that Gilberto pays the manufacturer
Complete the following table by determining Gilberto's accounting and economic profit of his boat business.2. Inputs and outputsLorenzo's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Lorenzo's very tiny kitchen has barely enough room for the four ovens in which his workers bakethe pizzas. Lorenzo signed a lease obligating him to pay the rent for the four ovens for the next year. Because of this, and because Lorenzo's kitchen cannot fit more than four ovens, Lorenzo cannot change the number of ovens he uses in his production of pizzas in the short run.However, Lorenzo's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Lorenzo lets them know how many
workers he needs for each day of the week. In the short run, these workers are variable inputs, and the ovens are fixed inputs.Lorenzo's daily production schedule is presented in the following table.Fill in the blanks to complete the Marginal Product of Labor column for each worker.Number of WorkersOutputMarginal Product of Labor(Pizzas)(Pizzas)0060160402100303130204150105160True or False: The shape of the production function reflects the law of increasing marginal returns.