Use the following scenario to answer the following questions:
Babak owns a sports practice facility called Boston Batting Cages in Boston,Massachusetts.During the first year of operation,Boston Batting Cages incurred many costs.In that year,Babak spent $5,000 on labor,$2,000 on maintenance,and $1,000 on electricity.Babak took out a loan to open his business,in which he would have earned $1,500,and his previous job,which he could get back at any time,paid him $50,000.
-Boston Batting Cages incurred ________ in implicit costs.
A) $9,500
B) $7,000
C) $51,500
D) $8,000
E) $50,000

Question

Quizplus · Accepted Answer

Implicit costs include the opportunity costs of the owner's resources. Here, it includes the $1,500 Babak would have earned from the loan interest and the $50,000 salary from his previous job, totaling $51,500.

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