Question: Suppose you own a restaurant that serves only dinner. You are trying to decide whether or not to rent out your dining room and kitchen

Suppose you own a restaurant that serves only dinner. You are trying to decide whether or not to rent out your dining room and kitchen during mornings to another firm, The Breakfast Club, Inc. That will serve only breakfast. Your restaurant currently has the following monthly costs:

Rent on building: .................................$ 2,000

Electricity: $ ............................................ 1,000

Wages and salaries: .......................... $15,000

Advertising: ..........................................$ 2,000

Purchases of food and supplies: .......$ 8,000

Your foregone labor income: .............$ 4,000

Your foregone interest: .......................$ 1,000

a. Which of your current costs are implicit, and which are explicit?

b. Suppose the Breakfast Club, Inc offers to pay $800 per month to use the building. They promise to use only their own food, and also to leave the place spotless when they leave each day. If you believe them, should you rent out your restaurant to them? Or does it depend? Explain.

Step by Step Solution

★★★★★

3.35 Rating (179 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Your foregone labor income and your foregone interest are implic... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

220-B-E-M-E (589).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

L09-1, L09-2, L09-3 PROBLEM 9.1B Determining the Cost of Plant Assets and Depreciation Smithfield Hotel recently purchased new exercise equipment for its exercise room. The following information...

Suppose you were trying to decide whether or not it made sense to crash your project. You know that normal project duration and direct costs are 60 days and $125,000. You are worried, though, because...

You are trying to decide whether or not to go to graduate school. If you get a job right after you get your bachelors degree, you expect to earn $40,000 a year, and you expect your salary to increase...

The following companies are trying to decide whether to change their accounts receivables collection policy. Required: Compute the cost of the current receivables policy for each company. Three...

Question 1 Structuring a Make-or-Buy Problem Fresh Foods, a large restaurant chain, needed to determine if it would be cheaper to produce 5,000 units of its main food ingredient for use in its...

1. eBook VideoVideoVideoVideoVideoVideoVideoVideoVideo Structuring a Make-or-Buy Problem Fresh Foods, a large restaurant chain, needed to determine if it would be cheaper to produce 5,000 units of...

1. Structuring a Make-or-Buy Problem Fresh Foods, a large restaurant chain, needed to determine if it would be cheaper to produce 5,000 units of its main food ingredient for use in its restaurants or...

Motivation describes the processes that cause people to behave in a particular way. Why do some people watch the Olympics but no other sporting events? Why do some people follow celebrities on social...

Could you send me the answers to this, you already did in another question. MGT 181 - Professor Gerans Mergers & Acquisitions Case DUE MARCH 17TH, 2016 BEFORE YOUR FINAL EXAM (11:30 AM) Instructions:...

Outback Steakhouse: Fueling the Fast Growth Company Marilyn L. Taylor, D.B.A Krishnan Ramaya, Ph.D George M. Puia, Ph.D Since the company's initial public offering in June of 1991, Wall Street...

60% + JOYT 2009 Thes: Leadership Magazine, Darden Restaurants. Clarence Otis Why America Is Addicted to Olive Garden By Chuck Salter On a Tuesday morning in April, the presidents of three of the...

(1 point) For each of the following functions, find the maximum and minimum values of the function on the circular disk: x? + y

Q3. Solve dy dx +4y= 4 tan 2x by the method of variation of parameters.

Dividends paid to a shareholder by a corporation should be reported on which of the following forms? Question 7 options: 1 0 9 9 - INT 1 0 9 9 - DIV 1 0 9 9 - MISC 1 0 9 9 - R

At what annual interest rate would the following have to be invested? a. $500 to grow to $1,948.00 in 12 years b. $300 to grow to $422.10 in 7 years c. $50 to grow to $280.20 in 20 years d. $200 to...

How many years will the following take? a. $500 to grow to $1,039.50 if its invested at 5 percent compounded annually b. $35 to grow to $53.87 if its invested at 9 percent compounded annually c. $100...

Max Coen is employed as a full-time police officer by the Memphis Police Department. He is required to abide by the departments rules of conduct, which apply whether he is on-duty or off-duty. With...

The Morriss Corporation is a very successful and profitable manufacturing corporation. The corporation just completed construction of new corporate offices, primarily for its top executives. The...

Loan payments of $700 due three months ago and of $1000 due today are to be paid by a payment of $800 in two months and a final payment in five months. If 9% interest is allowed, and the focal date...

3. Tree City reported a $1,500 net increase in fund balance for governmental funds. During the year, Tree purchased general capital assets of $9,000 and recorded depreciation expense of $3,000. What...

Use an AD and AS graph to explain the short-run and long-run effects on real GDP and the price level of an increase in autonomous consumption spending. Assume the economy begins at full employment.

A new government policy successfully lowers firms unit costs. What are the short-run and the long-run effects of such a policy? (Assume that full employment output does not change.)

In 1991, the Fed lowered its interest rate target, helping to bring the recession of that year to a rapid end. Make two copies of Figure 14(a) on a sheet of paper. Add curves to illustrate your...

Balloons By Sunset (BBS) is consideting the purchase of two new hot air balloons so that it can expand its desert sunset tours, Various information about the proposed investment follows: (Euture...

Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market the game either as a traditional board game or as an interactive DVD , but not both. Consider the following cash...

For an interest rate of 2% per quarter, compounded continuously, the effective semiannual interest rate is closest to A. Less than 4.0% B. 4.02% C. 4.12% D. Over 4.25% A steel fabrication company...