The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity,water,disposal)costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Refer to the data.Creamy Crisp's total economic costs are:

Question

Quizplus · Accepted Answer

Total economic costs include explicit costs (like lease, payments to workers, utilities) and implicit costs (entrepreneur's potential earnings, value of entrepreneur's talent in the next best activity, and forgone interest). Adding these: $22,000 (lease) + $120,000 (payments to workers) + $8,000 (utilities) + $50,000 (potential earnings) + $80,000 (value of talent) + $6,000 (forgone interest) = $286,000.

The Following Is Cost Information for the Creamy Crisp Donut