John's accountant tells him that he made a profit of $43,002 running a pottery studio in Orlando.John's wife,an economist,claims John lost $43,002 running his pottery studio.This means his wife is claiming that he incurred _____ in _____ costs.

Question

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of using resources that a firm already owns. John's wife is likely considering the opportunity costs (such as what John could have earned elsewhere with his time and investment) in addition to the explicit (accounting) profit of $43,002. Therefore, the total loss she is claiming includes both the explicit profit and the implicit costs, doubling the amount to $86,004.

John's Accountant Tells Him That He Made a Profit of $43,002