David's financial planner tells him that he made a profit of $31,300 running a ballroom dance studio in Sacramento. David's wife, an actuary, claims David lost $31,300 running his ballroom dance studio. This means his wife is claiming that he incurred _____ in _____ costs.
A)$62,600; implicit opportunity
B)$31,300; implicit opportunity
C)$31,300; explicit financial
D)$62,600; explicit financial

Question

Quizplus · Accepted Answer

The difference in profit calculation likely stems from considering implicit opportunity costs, which are not directly recorded in financial transactions. David's wife, being an actuary, might be accounting for the opportunity cost of not investing the time and resources elsewhere, which could have generated $31,300. Therefore, if David's financial planner claims a profit of $31,300 without considering these costs, and his wife claims a loss of the same amount by including them, the total difference attributed to implicit opportunity costs would be $62,600.

David's Financial Planner Tells Him That He Made a Profit