K ces Jane quit her job at Telus where she earned $36,000 a year. She cashed in $40,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Maple Ridge and Vancouver. There are 300 people who will pay $800 a year each for the commuter service; $650 from each person goes for gas, maintenance, insurance, depreciation, etc. (a) What are Jane's total revenues? (b) What are Jane's explicit costs? (c) What is Jane's accounting profit? (d) List two important implicit costs that Jane has not included. (e) What is Jane's pure economic profit (loss)? What actions should Jane take based on her pure economic profit (loss)?
K ces Jane quit her job at Telus where she earned $36,000 a year. She cashed in $40,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Maple Ridge and Vancouver. There are 300 people who will pay $800 a year each for the commuter service; $650 from each person goes for gas, maintenance, insurance, depreciation, etc. (a) What are Jane's total revenues? (b) What are Jane's explicit costs? (c) What is Jane's accounting profit? (d) List two important implicit costs that Jane has not included. (e) What is Jane's pure economic profit (loss)? What actions should Jane take based on her pure economic profit (loss)?
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.6P
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