Answer to Question #332769 in Microeconomics for Robera

Question

Mr. GIRUM opened a cafeteria called “ETHIO café” in Harar town on may1,

2022. The costs he incurred during one month of its operation are the following;

Purchased boiling machine for 10,000 birr, Paid wage for waitresses(workers)

amounting 2000 birr, Bought working materials for 5000 birr, Paid a rent on cafe’s

house amounting 2000 for the month. The chairs and tables used in the cafeteria are

previously owned by Mr. Girum and the current market price for this furniture is

estimated to be 3000 birr. The owner is running the business as a manager, but other

cafeteria owners have been asking Mr. Girum to manage their cafe paying him 3000

monthly salary. The total income the café generated during the month is 35,000 birr.

Then calculate

a. Accounting cost

b. Economic cost

c. Accounting profit

d. Economic profit

Answer 1

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