Question

John's accountant tells him that he made a profit of $43 002 running a pottery studio in Calgary. John's wife, an economist, claims John lost $43 002 running his pottery studio. This means that his wife is claiming that he incurred _____ in _____ costs.

A. $43 002; implicit

B. $86 004; explicit

C. $43 002; explicit

D. $86 004; implicit

Answer 1

Answer

Accounting profit =$43002

Economic profit =-$43002

Economic profit =Accounting profit - implicit cost

-43002=43002 -Implicit cost

Implicit cost =86004

He incurred $86004 in implicit costs.

option D