Asked by Zachary Wages on Jul 11, 2024
Verified
Refer to Scenario 7.5. During the year your economic costs were
A) $25,000.
B) $35,000.
C) $45,000.
D) $70,000.
Economic Costs
The comprehensive expense incurred from selecting one option over another, covering both direct and indirect costs.
Own Capital
The personal resources that an investor or business owner invests into a business venture.
- Comprehend the role of explicit and implicit costs in profit determination.
- Review situations to calculate economic and accounting gains, alongside economic expenses.
Verified Answer
DC
Daniela CervantesJul 18, 2024
Final Answer :
D
Explanation :
Economic costs include both explicit costs (like rent and supplies) and implicit costs (like the opportunity cost of the capital invested). Here, explicit costs are $25,000 and the implicit cost (the forgone salary of $45,000) totals to $70,000.
Learning Objectives
- Comprehend the role of explicit and implicit costs in profit determination.
- Review situations to calculate economic and accounting gains, alongside economic expenses.