After working as a head chef for years, Jared decided to open up his own restaurant.

Label each item as either a explicit cost or implicit costs (HINT: remember an implicit costs would mean there would have to be an opportunity cost)

1. _________________He gave up his yearly $60,000 salary to open his own restaurant last year.
2. __________________He withdrew $50,000 of his own savings that had been earning $2,000 in interest per year.
3. __________________He borrowed $100,000 from the bank at a rate of 5% per year.
4. __________________The restaurant space he was leasing had no separate office. Jared converted his basement apartment into office space. He had previously rented the apartment to a student for $300/month totaling $3,600 per year.
5. __________________Jared values his entrepreneurial skill at $10,000 annually to run a similar type if business if he had not elected to open his own restaurant.

The table summarizes his operations for the past year.

Total sales revenue $590,000

Employee wages $120,000

Materials $350,000

Interest on loan $5,000

Utilities $10,000

Rent $25,000

Total explicit costs $510,000

6.What is Jared's accounting profit?

7. Find Jared's total implicit costs.

8.What was Jared's economic profit last year?

Please explain your answers