George owns a dude ranch in Texas.He pays $32,000 per year in insurance,$408,000 in wages,and $23,000 in supplies.He forgoes $32,000 per year he could make as a police officer.His total revenue last year equaled $460,000.That means his economic _ equaled _.

A) profit;$3,000
B) losses;$3,000
C) losses;$35,000
D) profit;$35,000

Question

George owns a dude ranch in Texas.He pays $32,000 per year in insurance,$408,000 in wages,and $23,000 in supplies.He forgoes $32,000 per year he could make as a police officer.His total revenue last year equaled $460,000.That means his economic _____ equaled _____.

A) profit;$3,000
B) losses;$3,000
C) losses;$35,000
D) profit;$35,000

Archie Maginoo · Accepted Answer

Final Answer : C, Explanation :  Economic losses are calculated by considering both explicit and implicit costs. George's explicit costs include insurance ($32,000), wages ($408,000), and supplies ($23,000), totaling $463,000. His implicit cost is the forgone salary of $32,000. Adding explicit and implicit costs gives $495,000. Subtracting this from his total revenue of $460,000 results in economic losses of $35,000.

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