Problem: 1 - Economic profit

After working as a head chef for years, Jaskaran gave up his $80,000 salary to open his own restaurant last year. He withdrew $220,000 of his own savings that had been earning 1.5% interest and borrowed $150,000 from the bank at a rate of 4%. As the restaurant space he was leasing had no separate office, Jaskaran converted the basement apartment in his home into office and storage space. He had previously rented out the apartment to Humber students for $600/month. The following table summarizes his operations for the past year.

Total sales revenue			$700,000
	Employee wages	$190,000
	Materials	$450,000
	Interest on loan	$6,000
	Utilities	$12,000
	Rent	$25,000
Total explicit costs			$683,000

What is Jaskaran's accounting profit?

Suppose Jaskaran's could have used his talents to run a similar kind of business instead. If he values his entrepreneurial skill at $18,500 annually, find Jaskaran's total implicit costs.

What was Jaskaran's economic profit last year?