During the year of operation, a firm collects $450,000 in revenue and spends $10

Question

During the 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.

The explicit opportunity costs of using market-supplied resources are ?   The implicit opportunity costs of using owner-suppliced resources are? Total economic cost is? The firm earns economic profit of ? The firms accounting profit is? If the owner could earn 15% annually on the money she has invested in the firm, the economic profit of the firm would be ? when revenue is $450,000.

Explanation / Answer

a. $100,000; $75,000; $175,000.

b. $275,000.

c. $350,000.

d. $237,500

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