The following is cost information for the Creamy Crisp Donut

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur\'s potential earnings as a salaried worker = $50,000 Annual lease on building $22,000 Annual revenue from operations - $380,000 Payments to workers $120,000 utilities (electricity, water, disposal) costs-$8,000 Value of entrepreneur\'s talent in the next best entrepreneurial activity $80,000 Entrepreneur\'s forgone interest on personal funds used to finance the business = $6,000 Refer to the above data. Creamy Crisp\'s total economic costs are: O $286,000 O $150,000. O $94,000. O $156,000.

Solution

Creamy Crisp\'s explicit costs = annual lease on building + payment to workers + utilities cost

= 22000 + 120000 + 8000

= 150000

Creamy Crisp\'s implicit costs including the normal profit = Entrepreneurs potential earnings as a salaried worker + value of entrepreneurs talent in the next next entrepreneurial activity + entrepreneurs foregone interest on personal funds used to finance the business

= 50000 + 80000 + 6000

= 136000

Creamy Crisp\'s total economic costs = explicit costs + implicit costs including normal profit

= 150000 + 136000

= 286000

ANSWER : $ 286,000