The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $40,000Annual lease on building = $25,000Annual revenue from operations = $420,000Payments to workers = $150,000Utilities (electricity, water, disposal)costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000Creamy Crisp's total economic costs are

Question

Quizplus · Accepted Answer

Total economic costs include both explicit and implicit costs. Explicit costs are $25,000 (lease) + $150,000 (workers) + $8,000 (utilities) = $183,000. Implicit costs are $40,000 (forgone salary) + $80,000 (next best entrepreneurial activity) + $6,000 (forgone interest) = $126,000. Total economic costs = $183,000 + $126,000 = $309,000.

The Following Is Cost Information for the Creamy Crisp Donut