Ed Van Zaig is considering opening a sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and use a building that he owns and currentlyrents to his brother for $6,000 a year. His costs at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What are his implicit costs?
A) $26,000
B) $66,000
C) $78,000
D) $52,000
E) $72,000

Question

Quizplus · Accepted Answer

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

Ed Van Zaig Is Considering Opening a Sushi Bar