Explicit costs are costs out of the pocket that is payment that are actually made.
Implicit cost represent opportunity cost of using resources already owned by the firm, for example working in the business while not getting a formal salary.
a)
TotalExplicitcost=intialcost+rent+supplies
10,000+25,000+5,000=40,000/
b) Totalimplicitcost=earningsforgone+interestforegone
40,000+(10,000∗2%)=40,200/
c)
Accountingprofit=Totalrevenue−explicitcost
95,000−40,000=55,000/
d) Economicprofit=Totalrevenue−explicitcost−implicitcost
95,000−40,000−40,200=14,800/
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