How does a business owner know if it is financially worthwhile to open a business?
A)The implicit opportunity costs are less than revenue.
B)There are no implicit opportunity costs.
C)The business earns accounting profits.
D)The business earns economic profits.

Question

Quizplus · Accepted Answer

A business owner should consider economic profits rather than accounting profits when determining if it is financially worthwhile to open a business. Economic profits take into account both explicit and implicit costs, including opportunity costs. If the economic profits are positive, it means that the business is generating enough revenue to cover all costs, including the opportunity cost of the resources used in the business, and is therefore financially worthwhile to open.

How Does a Business Owner Know If It Is Financially