explicit and implicit cost

Each question must be answered in apa format and sources must be cited.

At the beginning of 2017, a computer programmer quit his job and gave up a salary of $95,000 per year. He started his own organic farm, Turnip Tom’s, Inc. An income statement for Turnip Tom’s is shown below:

2015

Revenues

$ 98,000

Operating costs and expenses

Cost of products sold

$ 15,500

Selling expenses

$ 6,500

Administrative expenses

$ 3,200

Total operating costs

$ 25,200

Income from Operations

$ 72,800

Interest expense (bank loan)

$ 9,500

Legal expenses

$ 1,200

Income taxes

$ 22,000

Net income

$ 40,100

To get started, Tom spent $300,000 of his own savings to purchase land and equipment to be used for the farm. In 2015, Tom could have earned a 15 percent return by investing in stocks of other business with risk levels similar to his farm.

Answer the following questions using the information given above. Be sure to show each step of your calculations.

1.

What are the total explicit costs for 2017?

2.

What are the total implicit costs for 2017?

3.

What are the total economic costs for 2017?

4.

What is accounting profit for 2017?

5.

What is economic profit for 2017?

6.

Using only your analysis in question 1-5, would you say that Tom made a good economic decision to leave is job to start the organic farm? Explain using at least 100 words.

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