Efficiency, equity and production costs

I. Explicit and implicit costs Determine and explain if each is an explicit or implicit cost: Explain why.

a. The wage income an owner could earn if he did not work for himself. b. The payment of rent for a warehouse that is rented by the company. c. The possible income received from the rental to another company of a building owned by the company that uses it as a warehouse for its own production. d. Payments made for labor hired in the labor market.

II. Economic efficiency: profit or loss measures Calculate the accounting profit or loss as well as the economic profit or loss in each of the following situations: Present the calculation procedure to obtain the final result.

a. A company with total revenue of $ 130 million, explicit costs of $ 80 million, and implicit costs of $ 20 million b. A company with total revenue of $ 145 million, explicit costs of $ 110 million, and implicit costs of $ 15 million c. A company with total revenue of $ 110 million, explicit costs of $ 80 million, and implicit costs of $ 50 million d. A company with total revenue of $ 350,000, explicit costs of $ 395,000, and implicit costs of $ 40,000