Refer to Scenario 7.3 below to answer the question(s) that follow.
SCENARIO 7.3: Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $60,000 annually. Last year you earned a total revenue of $100,000. Rent and supplies last year were $50,000.
-Refer to Scenario 7.3. Your annual economic costs are
A) $0.
B) $50,000.
C) $60,000.
D) $110,000.

Question

Quizplus · Accepted Answer

Economic costs include both explicit costs (like rent and supplies) and implicit costs (like the salary foregone by not taking the job offer). Here, explicit costs are $50,000, and the implicit cost (the foregone salary) is $60,000, totaling $110,000.