2. Mr. Sarpong operates a business at Tudu that sells diapers. The shop provides
an annual revenue from sales of GHC106,000. Each year Mr. Sarpong pays
GHC15,000 in rent for the shop, GHC3,000 in business taxes, and GHC81,000
on products to sell. Mr. Sarpong estimates he could rather have put the
GHC100,000 he has invested in his shop into a purchase and supply business
and earn an annual 20 percent per annum returns on her funds. He also
estimates that he could earn a total annual wage of GHC41,000 if he worked
at Ntiamoah Trading Company as a purchasing officer other than the shop.
a. Calculate the total explicit costs and total implicit costs of running the
shop.
b. What is the accounting profit and the economic profit of the store?
c. Should she consider closing down the store? Why?
