Amanda,aged 6,opens a lemonade stand.She makes all the lemonade from a mix she found in her parents' pantry.Her stand is an old box she found in the garage.The pitcher and paper cups were taken from the kitchen.Which of the following is true?
A)The opportunity cost of the lemonade is zero.
B)The only opportunity cost of the lemonade is Amanda's time.
C)Amanda's explicit costs are zero.
D)The implicit costs of Amanda's lemonade are zero.
E)Whatever revenue Amanda gets will be pure economic profit.

Question

Quizplus · Accepted Answer

Amanda's explicit costs, or the actual monetary costs of the lemonade stand, are zero since she used items already found in her home. However, there could be implicit costs, such as the value of Amanda's time and the opportunity cost of using her parents' resources. But since the question only asks about explicit costs, choice C is the best answer.

Amanda,aged 6,opens a Lemonade Stand