Harvey quit his job at State University, where he earned $58,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $8,000 a year. To start the business, he cashed in $60,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 15,000 units of software at $60 for each unit. Of the $60 per unit, $50 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.The implicit costs of Harvey's firm in the first year were

Question

Quizplus · Accepted Answer

Implicit costs for Harvey's firm include his forgone salary of $58,000, forgone entrepreneurial income of $8,000, and the forgone interest from the bonds ($60,000 * 10% = $6,000). Adding these together gives $58,000 + $8,000 + $6,000 = $72,000.

Harvey Quit His Job at State University, Where He Earned