Harvey quit his job at State University, where he earned $62,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $4,000 a year. To start the business, he cashed in $50,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 10,000 units of software at $72 for each unit. Of the $72 per unit, $60 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.The explicit costs of Harvey's firm in the first year were

Question

Quizplus · Accepted Answer

The explicit costs include the direct costs of production, packaging, marketing, wages, benefits, and rent. With 10,000 units sold at $60 per unit for these costs, the explicit costs are 10,000 * $60 = $600,000.

Harvey Quit His Job at State University, Where He Earned