A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000, for food and $2,000 for gas and electricity. What is the sum of his implicit costs?
A) $26,000.
B) $66,000.
C) $78,000.
D) $52,000.

Question

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of using resources that the firm already owns. Here, the chef's implicit costs include the salary he would forego ($20,000) and the rental income he would lose ($6,000), totaling $26,000.

A Young Chef Is Considering Opening His Own Sushi Bar