Question

Self-employed business owners frequently overestimate their profit levels because they

underestimate their implicit, fixed, explicit costs?

Overestimate total revenue?

Answer 1

understimate their implicit cost thus overstate the income from the business.

Step-by-step explanation:

As their are self-employed they don't have to write a check every two week to receive their salary making ignore the opportunity cost of their wages. Then, it will also ignore the return of their capital will produce if invested on other project.

This opportunity cost makes the economic gain lower than their accounting income.