UNITED STATES EN US CMP Microeconomics ECO20220102 burses 18

UNITED STATES (EN US) CMP Microeconomics (ECO-202-20102) burses 18SUCMP ECO-202-20102 I Week 5 tv Consider the following information. After obtaining your business degree you decide to tleave your job and begin your own business At your oid job you earned a salary of $35,000 and you will eam $50.000 at your new business, Your current expenses are $10,000 tor office rental and $5,000 for supplies Calculate explicit costs Paragraph , B : 1 El

Solution

Explicit costs are the costs which are actually incurred in the course of doing business. Here, explicit costs are rental and cost of supplies. Total explicit costs = rental costs + supplies costs = $10,000 + $5,000 = $15,000.

Note: The $35,000 salary forgone by me is an example of implicit or opportunity cost. So, it is not included in the calculation of explicit costs.