Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. Ziva's economic profit from farming equals

Question

Quizplus · Accepted Answer

Ziva's economic profit is calculated by subtracting both her explicit costs and implicit costs from her total revenue. Her explicit cost is $130 for seeds. Her implicit cost is the opportunity cost of not working as a consultant for 10 hours, which is $250 (10 hours x $25/hour). Her total revenue from farming is $300. Therefore, her economic profit is $300 - $130 - $250 = -$80.

Scenario 13-6 Ziva Is an Organic Lettuce Farmer, but She Also Spends