Crackerjack Chicken is a local fast food chain in Toowoomba that is looking to e
ID: 1143431 • Letter: C
Question
Crackerjack Chicken is a local fast food chain in Toowoomba that is looking to expand its market. They have recently opened a store in Brisbane and are earning $8,000/day, with explicit costs of $3,000/day. The opportunity cost of opening the store in this location is considered to be $3,000lday. Which of the following statements are true: Crackerjack Chicken's implicit cost for the Brisbane store is $3,000/day. Crackerjack Chicken's Brisbane store is earning a normal profit. Crackerjack Chicken's Brisbane store is earning an economic profit of $2,000/day. Crackerjack Chicken's Brisbane store is earning an accounting profit of $2,000/day.Explanation / Answer
Options (1) and (3) are correct.
Opportunity costs are also known as Implicit costs.
Accounting profit ($) = Revenue - Explicit cost = 8,000 - 3,000 = 5,000
Economic profit ($) = Accounting profit - Opportunity cost = 5,000 - 3,000 = 2,000