Suppose you own a small business. Last month, your total revenue was $6,000. In addition, you paid:
$1,000 in monthly rent for office space,
$200 in monthly rent for equipment,
$3,000 to your workers in wages for the month, and
$1,000 for the supplies you used that month.

If you correctly determine that your economic profit last month was negative $200, then it must be true that:
A)you do not have any implicit costs.
B)your implicit costs are $200 per month.
C)your implicit costs are $1,000 per month.
D)the rent you pay on your equipment is an implicit cost.

Question

Suppose you own a small business. Last month, your total revenue was $6,000. In addition, you paid:  
$1,000 in monthly rent for office space,
$200 in monthly rent for equipment,
$3,000 to your workers in wages for the month, and
$1,000 for the supplies you used that month.
 
If you correctly determine that your economic profit last month was negative $200, then it must be true that:
A)you do not have any implicit costs.
B)your implicit costs are $200 per month.
C)your implicit costs are $1,000 per month.
D)the rent you pay on your equipment is an implicit cost.

Quizplus · Accepted Answer

The Answer is C

Suppose You Own a Small Business