The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be
A) $50.
B) $100.
C) $250.
D) $350.

Question

Quizplus · Accepted Answer

Implicit costs are $50 because the bakery's total revenue ($300 from selling 300 muffins at $1 each) minus explicit costs ($250) equals $50, which represents the normal rate of return (implicit costs).

The Oh So Humble Bakery Sells 300 Muffins at a Price