You are the owner and only employee of a company that repairs computers.Last year,you earned total revenues of $75,000.Your costs for equipment,rent,and supplies were $10,000.To start this business you quit a job at a computer software firm that paid $40,000 a year.During the year,your economic costs were

Question

Quizplus · Accepted Answer

Economic cost includes both explicit costs (such as equipment, rent, and supplies) and implicit costs (such as the salary foregone from quitting the previous job). Therefore, the economic costs for this business are $10,000 (explicit costs) + $40,000 (implicit costs) = $50,000.

You Are the Owner and Only Employee of a Company