The accompanying table outlines the explicit and implicit costs incurred by a small graphic design company in France that takes in annual revenues equal to $250,000. $\begin{array}{ll}\text { Explicit Costs }\
\text { Office Rent } & \$ 2,000 / \text { month } \
\text { Utilities } & \$ 200 / \text { month } \
\text { Computers } & \$ 1,000 / \text { month } \
\text { Labor } & \$ 5,000 / \text { month }\\text { Implicit Costs }\
\text { Forgone Wages } & \$ 55,000 / \text { year } \
\text { Forgone Interest on Initial Investment } & \$ 5,000 / \text { year }
\end{array}$
a. What would this company's accounting profits equal for a year?
b. What would this company's economic profits equal for a year?
c. What would we expect to happen in the long run for this market? Why?

Question

The accompanying table outlines the explicit and implicit costs incurred by a small graphic design company in France that takes in annual revenues equal to $250,000. $\begin{array}{ll}\text { Explicit Costs }\
\text { Office Rent } & \$ 2,000 / \text { month } \
\text { Utilities } & \$ 200 / \text { month } \
\text { Computers } & \$ 1,000 / \text { month } \
\text { Labor } & \$ 5,000 / \text { month }\\text { Implicit Costs }\
\text { Forgone Wages } & \$ 55,000 / \text { year } \
\text { Forgone Interest on Initial Investment } & \$ 5,000 / \text { year }
\end{array}$ 
a. What would this company's accounting profits equal for a year?
b. What would this company's economic profits equal for a year?
c. What would we expect to happen in the long run for this market? Why?

Quizplus · Accepted Answer

The Answer of The accompanying table outlines the explicit and implicit costs incurred by a small graphic design company in France that takes in annual revenues equal to $250,000. $\begin{array}{ll}\text { Explicit Costs }\
\text { Office Rent } & \$ 2,000 / \text { month } \
\text { Utilities } & \$ 200 / \text { month } \
\text { Computers } & \$ 1,000 / \text { month } \
\text { Labor } & \$ 5,000 / \text { month }\\text { Implicit Costs }\
\text { Forgone Wages } & \$ 55,000 / \text { year } \
\text { Forgone Interest on Initial Investment } & \$ 5,000 / \text { year }
\end{array}$ 
a. What would this company's accounting profits equal for a year?
b. What would this company's economic profits equal for a year?
c. What would we expect to happen in the long run for this market? Why?

The Accompanying Table Outlines the Explicit and Implicit Costs Incurred