You are the owner and only employee of a company that repairs computers.Last year,you earned total revenues of $75,000.Your costs for equipment,rent,and supplies were $10,000.To start this business you quit a job at another computer software firm that paid $40,000 a year.During the year,your economic costs were:

Question

Quizplus · Accepted Answer

Economic costs include both explicit costs (such as equipment, rent, and supplies) and implicit costs (such as the opportunity cost of quitting a $40,000 a year job to start the business). Therefore, the economic costs for the year were $10,000 (explicit costs) + $40,000 (implicit costs) = $50,000.

You Are the Owner and Only Employee of a Company