During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent, and utilities. The firm's owner has provided $750,000 of her own money instead of investing the money and earning a 10% annual rate of return.
a. The explicit opportunity costs of using market-supplied resources are $______________. The implicit opportunity costs of using owner-supplied resources are $______________. Total economic cost is $______________.
b. The firm earns economic profit of $______________.
c. The firm's accounting profit is $______________.
d. If the owner could earn 15% annually on the money she has invested in the firm, the economic profit of the firm would be ______________ (when revenue is $450,000).

Question

Quizplus · Accepted Answer

The Answer of During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent, and utilities. The firm's owner has provided $750,000 of her own money instead of investing the money and earning a 10% annual rate of return.
a. The explicit opportunity costs of using market-supplied resources are $______________. The implicit opportunity costs of using owner-supplied resources are $______________. Total economic cost is $______________.
b. The firm earns economic profit of $______________.
c. The firm's accounting profit is $______________.
d. If the owner could earn 15% annually on the money she has invested in the firm, the economic profit of the firm would be ______________ (when revenue is $450,000).

During a Year of Operation, a Firm Collects $450,000 in Revenue