George owns a dude ranch in Texas.He pays $32,000 per year in insurance,$408,000 in wages,and $23,000 in supplies.He forgoes $32,000 per year he could make as a police officer.His total revenue last year equaled $460,000.That means his economic _____ equaled _____.

Question

Quizplus · Accepted Answer

Economic losses are calculated by considering both explicit and implicit costs. George's explicit costs include insurance ($32,000), wages ($408,000), and supplies ($23,000), totaling $463,000. His implicit cost is the forgone salary of $32,000. Adding explicit and implicit costs gives $495,000. Subtracting this from his total revenue of $460,000 results in economic losses of $35,000.

George Owns a Dude Ranch in Texas