1. Refer to Table A. The accounting costs for this firm are_____________ 2. Refe

Question

1. Refer to Table A. The accounting costs for this firm are_____________

2. Refer to Table A. The accounting profits for this firm are____________

3. Refer to Table A. The implicit costs for this firm are_____________

4. Refer to Table A. The economic profits for this firm are_________________

Please show how you got them to give you full points!

Refer to Table A. The accounting costs for this firm are Refer to Table A. The accounting profits for this firm are Refer to Table A. The implicit costs for this firm are

Explanation / Answer

Accounting Costs do not include opprtunity costs.

Thus the accounting costs = Salaries + Input Costs + Utility Bills + Interest Payment + Insurance Payment = 1540 + 940 + 90 + 180 + 40 = 2790$

Accounting profit = Revenue - Accounting Cost = 4410$

Implicit costs are basically the opportunity costs

so implicit costs = Opportunity cost of owner's time + opportunity cost of capital use = 400 + 500 = 900$

Now economic cost = accounting cost + implicit cost = 2790 + 900 = 3600$

Econpmic profit = Revenue - economic cost = 7200 - 3600 = 3600$

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