Maryann and Don want to open their own deli.To do so,Maryann must give up her job,where she earns $20,000 per year,and Don must give up his part-time job,where he earns $10,000 per year.They must liquidate their money market fund,which earns $1,000 in interest annually.The rent on the building is $10,000 per year,and the expenses of necessities such as utilities,corned beef,and pickles are $35,000 annually._____ is the explicit cost per year of operating the deli.
A)$10,000
B)$35,000
C)$45,000
D)$31,000
E)$76,000

Question

Quizplus · Accepted Answer

The explicit cost includes the rent and expenses of necessities, which total $45,000 per year. The income they give up by quitting their jobs and liquidating their money market fund is an implicit cost. Therefore, the explicit cost per year of operating the deli is $45,000.

Maryann and Don Want to Open Their Own Deli