Ask Question
10 December, 16:08

Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000. If the owner could work for another company for $30,000 a year, we would conclude that:a. the firm is incurring an economic loss.

b. implicit costs are $25,000.

c. the total economic costs are $100,000.

d. the individual is earning an economic profit of $25,000.

+3
Answers (1)
  1. 10 December, 16:35
    0
    a. the firm is incurring an economic loss.

    Explanation:

    The computation of the economic profit is shown below:

    = Total revenues - total cost

    where,

    Total cost would be

    = explicit cost + implicit cost

    = $75,000 + $30,000

    = $105,000

    The implicit cost reflects the opportunity cost i. e $30,000

    So, the economic loss would be

    = $105,000 - $100,000

    = $5,000

    Hence, there is an economic loss of $5,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000. If the owner could work for ...” 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