Ask Question
13 August, 19:00

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000. Which of the following statements is correct?

a) Bev's total explicit costs are $25,300.

b) Bev's total implicit costs are $300.

c) Bev's accounting profits exceed her economic profits by $300.

d) Bev's economic profit is $4,700.

+4
Answers (1)
  1. 13 August, 19:16
    0
    The correct answer is option d.

    Explanation:

    Bev opened her own court-reporting business.

    In her first year, she earned $30,000 as revenue.

    If she had not started a business she would have earned a salary of $25,000.

    She financed the business by withdrawing money from her personal savings account.

    She would have earned $300 in interest if she had not withdrawn money.

    The accounting profit for Bev is $25,000.

    The total implicit cost is

    = $25,000 + $300

    = $25,300

    The economic profits exclude implicit costs from revenue.

    Economic profits

    = $30,000 - $25,300

    = $4,700
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers