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9 May, 13:54

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?

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  1. 9 May, 16:03
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    Total amount for Alina's explicit expenses are $49,800

    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
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