Question

Suppose a person quits a job earning ​$40,000 per year and starts a business with ​$90,000 withdrawn from a​ money-market account earning 15% per year. The implicit cost of the business is ​_____ nothing for the​ entrepreneur's time plus ​____ nothing for the​ entrepreneur's funds ​(enter your response as an ​integer).

Answer 1

The correct answers are $40,000 and $13,500

Step-by-step explanation:

The implicit cost of the business is ​$40,000 nothing for the​ entrepreneur's time plus $​13,500 nothing for the​ entrepreneur's funds ​(enter your response as an ​integer)

The implicit cost indicates the cost of an asset rather than selling it or renting it out. In other words, the company has to give up by deciding not to exploit an asset. For this case $40,000

For the other line

15% = 0.15

$90,000 x 15% = $13,500