Table 8.1
-Refer to Table 8.1.Suppose Mr.B withdrew $50,000 from his account that earned 10% to invest into this business.He quit his full-time job that paid $40,000 to manage this business.If Mr.B is excited about his $45,000 profit,an economist would

Question

Quizplus · Accepted Answer

Economists consider both explicit and implicit costs. Mr. B gave up $50,000 that could have earned 10% interest ($5,000) and a $40,000 salary. These forgone earnings ($45,000) are his opportunity cost. Since his business profit equals this amount, his economic profit is zero.

Table 8.1 -Refer to Table 8.1.Suppose Mr.B Withdrew $50,000 from His Account