A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20,000 a year,and move into a building that he owns and currently rents to his brother for $6,000 a year.His estimated expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.The chef's explicit costs are equal to _____
A)$26,000.
B)$66,000.
C)$78,000.
D)$52,000.
E)$72,000.

Question

Quizplus · Accepted Answer

The explicit costs of the young chef would be:

Expenses at sushi bar = $50,000 (food) + $2,000 (gas and electricity) = $52,000

Explicit costs = Lost income + Rent + Expenses at sushi bar
Explicit costs = $20,000 (lost income) + $6,000 (rent) + $52,000 (expenses at sushi bar) = $78,000

Therefore, the explicit costs of the young chef would be $78,000, which is option D.

A Young Chef Is Considering Opening His Own Sushi Bar