Situation 21-4
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $50,000 per year.Refer to Situation 21-4. What are Joe's implicit costs?

Question

Situation 21-4
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $50,000 per year.Refer to Situation 21-4.  What are Joe's implicit costs?

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of using resources owned by the business for which no explicit payment is made. In this case, Joe's implicit cost is the highest salary offer he received, which is $50,000.

Situation 21-4 Joe Is the Owner-Operator of Joe's Haircuts Unlimited. Last Year