Shen lives in Houston and runs a business that sells guitars. In an average year, he receives $722,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. He owns his showroom; if he chooses to rent it out, he will receive $1,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Shen does not operate this guitar business, he can work as an accountant and receive an annual salary of $42,000 with no additional monetary costs. No other costs are incurred in running this guitar business.

Identify each of Shen’s costs in the following table as either an implicit cost or an explicit cost of selling guitars.

Implicit Cost Explicit Cost
The wholesale cost for the guitars that Felix pays the manufacturer.
The rental income Felix could receive if he chose to rent out his showroom.
The salary Felix could earn if he worked as a paralegal.
The wages and utility bills that Felix pays.

Complete the following table by determining Shen’s accounting and economic profit of his guitar business.