Felix lives in San Diego and runs a business that sells pianos. In an average year, he receives $701,000 from selling pianos. Of this sales revenue, he must pay the manufacturer for a wholesale cost of $420,000; he also pays wages and utility bills totaling $247,000. He owns his showroom; if he chooses to rent it out, he will receive $9,000 in rent per year. Assume that the value of the showroom does not depreciate over the year. Also, if Felix does not operate this piano business, he can work as a financial advisor and receive an annual salary of $32,000 with no additional monetary costs. No other costs are noted in running this piano business.

1. Identify each of Felix's costs in the following table as either an implicit cost or explicit cost of selling pianos.
Implicit Cost Explicit Cost
The rental income Felix could receive if he chose to rent out his showroom
The salary Felix would earn if he worked as a financial advisor
The wages and utility bills that Felix pays
The wholesale cost for the pianos that Felix pays the manufacturer
2 Complete the following table by determining Felix's accounting and economic profit of his piano business.
Profit (Dollars)
Accounting Profit
Economic Profit
3. If Felix's goal is to maximize his economic profit, he (should/should not) stay in the piano business because the economic profit he would earn as a financial advisor would be $