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 revenues exceed its total costs, including a normal profit, by

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Quizplus · Accepted Answer

The total economic cost includes explicit costs (lease, payments to workers, utilities) and implicit costs (entrepreneur's potential earnings, forgone interest, and value of talent). Total explicit costs = $25,000 + $150,000 + $8,000 = $183,000. Total implicit costs = $40,000 + $80,000 + $6,000 = $126,000. Total economic cost = $183,000 + $126,000 = $309,000. Total revenue = $420,000. Economic profit = $420,000 - $309,000 = $111,000.

The Following Is Cost Information for the Creamy Crisp Donut