Armand's accountant tells him that he made a profit of $21,300 running a pottery studio in Boston. Armand's wife, an economist, claims Armand lost $21,300 running his pottery studio. This means his wife is claiming that he incurred _____ in _____ costs.
A)$42,600; implicit opportunity
B)$21,300; implicit opportunity
C)$21,300; explicit financial
D)$42,600; explicit financial

Question

Quizplus · Accepted Answer

The difference in profit calculation likely stems from the inclusion of implicit opportunity costs by Armand's wife, which are not considered in the accountant's calculation. If the accountant shows a profit of $21,300 and the wife claims a loss of the same amount, it suggests that the implicit opportunity costs (the income Armand could have earned elsewhere) are equal to the studio's accounting profit, doubling the total cost considered by the wife to $42,600.

Armand's Accountant Tells Him That He Made a Profit of $21,300