Tonya\'s variable: input is land input is labor inputs are both land and labor i

Question

Tonya's variable: input is land input is labor inputs are both land and labor inputs are neither land nor labor All of the following are considered implicit costs except: paying rent on an existing building. interest that could have been earned from the savings account if the money were not used on the existing business. the wages the entrepreneur could have earned if he or she chose to pursue a career in corporate America. forgone entrepreneurial income. What is the optimal number of servings of ice cream to produce? 400 300 200 100

Explanation / Answer

A cost that is represented by lost opportunity in the use of a company's own resources, excluding cash. The implicit cost for a firm can be thought of as the opportunity cost related to undertaking a certain project or decision, such as the loss of interest income on funds, or depreciation of machinery used for a capital project.

It is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires.

so answer is

a) paying rent on an existing building..

the optimal number os servings to be produced is 300.which gives the maximum of difference between the total benefits and total costs.

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