1. Which of the following is an implicit cost?

 

A. The $100,000 the firms pay a person in salary to work as a manager for verizon wireless.

 

B. Paying $1,000 rent to a mall to run a video game business.

 

C. You forgo a $60,000 a year salary working as a manager of plumbing business so you can own your own plumbing business.

 

2. Ralph owns a small pizza restaurant where he works full time in the kitchen. His total revenue is $100,000 a year, and his rent is $36,000 a year. He pays his one employee $24,000 a year, and the cost of ingredients and overhead averages $60,000 a year. Also, Ralph forgoes $35,000 per year as the manager of a competing pizza restaurant nearby. His economic profit for the year was:

 

A. $34,000

 

B. $55,000

 

C, $20,000

 

D. -$55,000

 

E. -$20,000

 

3. If you are charging $100 for skis and you sell 2,000 skis in a year. The explicit costs for the ski business, including insurance, taxes and paying wages to employees, equals $300,000, while the implicit cost of the ski business is the $200,000 job you had forgone being an attorney for the state of Maine. Based on these figures, what is happening here?

 

 A. You are breaking even.
 B. You are making a loss.
 C. You are making a profit. 

Answer rating: 100% (QA)

Answer Part a Implicit cost are those which is incurred by an enterprenuer ability to let go of the ... View the full answer