Help

Exercise I: Explicit and implicit costs:

Determine if each of the following is an explicit or implicit cost:

A. The income from wages 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.

Exercise 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:

Note: To receive the full score, you must present the procedure of your calculations to obtain the final result; results without procedure will not be acceptable.

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