Asked by
Ghenwa Sherif
on Dec 19, 2024
Verified
The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $50,000Annual lease on building = $22,000Annual revenue from operations = $380,000Payments to workers = $120,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000Creamy Crisp's implicit costs, including a normal profit, are
A) $136,000.
B) $150,000.
C) $94,000.
D) $156,000.
Implicit Costs
The opportunity costs that arise from using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.
Normal Profit
The lowest amount of profit a company must earn to stay competitive and cover its opportunity costs.
- Highlight the variances between explicit and implicit costs, including the contrasts between economic and accounting profits.
Verified Answer
SM
Learning Objectives
- Highlight the variances between explicit and implicit costs, including the contrasts between economic and accounting profits.