Question

During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent, and utilities. The firm’s owner has provided $750,000 of her own money instead of investing the money and earning a 10% annual rate of return. a. Calculate the explicit opportunity costs of using market-supplied resources, the implicit opportunity costs of using owner-supplied resources, and the total economic cost. (6 marks) b. Calculate the economic profit this firm earns and its accounting profit. (4 marks) c. When the revenue is $450,000, if the owner could earn 15% annually on the money she has invested in the firm, calculate the economic profit the firm would earn

          During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor
expense, raw materials, rent, and utilities. The firm’s owner has provided $750,000 of her own
money instead of investing the money and earning a 10% annual rate of return. a. Calculate the explicit opportunity costs of using market-supplied resources, the
implicit opportunity costs of using owner-supplied resources, and the total economic
cost. (6 marks)
b. Calculate the economic profit this firm earns and its accounting profit. (4 marks)
c. When the revenue is $450,000, if the owner could earn 15% annually on the money
she has invested in the firm, calculate the economic profit the firm would earn

Added by Steven K.

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