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Jillian runs a cupcake shop where she sells 20000 cupcakes per year at $2.00 each. She employs 5 people, each of whom worked a total of 500 hours last year; she paid them $10.00 per hour. Her costs of equipment and raw materials add up to $21000.00. Her business ability is legendary, and other companies have offered to pay Jillian $50000.00 to come work for them. She also knows she could sell her cupcake shop for $120000.00. The bank in town pays an annual interest rate of 3% on all funds deposited with it.
Over the course of one year,
a) What is Jillianâs total revenue? [1]
b. What are Jillianâs total explicit costs? [1]
c.What are Jillianâs total implicit costs? [1]

Sagot :

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Over the course of One Year,

a) Jillian's total revenue is $40000.00.

b) Jillian's total explicit costs are $34000.00.

c) Jillian's total implicit costs are $50000.00.

Jillian's total revenue is calculated by multiplying the number of cupcakes she sells per year (20000) by the price she charges for each cupcake ($2.00), for a total of 20000 * $2.00 = $40000.00.

Jillian's total explicit costs includes the costs of labor (5 employees * 500 hours each * $10.00/hour = $25000.00), equipment and raw materials ($21000.00), and the interest on her bank deposits (3% * $40000.00 = $1200.00). The total explicit costs are therefore $25000.00 + $21000.00 + $1200.00 = $34000.00.

Jillian's total implicit costs are $50000.00. Implicit costs are the opportunity costs of running a business, and they include the value of any potential income or assets that are forgone in order to run the business. In this case, Jillian's implicit costs include the value of the job offers she has received ($50000.00) and the potential value of her cupcake shop if she were to sell it ($120000.00). The total implicit costs are therefore $50000.00 + $120000.00 = $170000.00.

Learn more about Explicit and Implicit Costs here:

https://brainly.com/question/15112907

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