Question

Alina has decided to follow her passion opening a dance studio to teach ballet lessons. She will be taking a pay cut to follow her dream. She makes an annual salary of $175,000 as a stock broker, but expects to only earn $80,000 a year teaching dance. To run her business, she will need to lease a space, purchase a dance floor and mirrors, hire a secretary, and and pay for some advertising. The studio lease will cost her $18,000 annually, a dance floor and mirrors cost $11,000, and advertising is $800. She expects to pay a part-time secretary $20,000 a year. What is the total amount for Alina's explicit expenses?

Answer 1

Total amount for Alina's explicit expenses are $49,800

Step-by-step explanation:

Explicit Expenses all the expenses paid from the pocket. It includes wages or salaries, rent and material purchased etc. the Implicit cost is the opportunity cost of the funds / resources already have. Alina's Explicit expenses are those which she paid from her pocket, which are:

Studio lease cost $18,000

dance floor and mirrors cost $11,000

Advertising cost $800

Part-time secretary salary $20,000

Total Explicit Expense $49,800