Question

samarah quit a $20,000 job and opens her own business. she pays herself $30,000 a year to run the business. samarah's time in her business has an explicit cost of question 14select one: a. $30,000. b. $0. c. $10,000. d. $50,000. e. $20,000.

Answer 1

Samarah’s explicit cost of running her business is the salary she pays herself, $30,000. The implicit cost is the $10,000 she foregoes by not working at her previous $20,000 job.

Step-by-step explanation:

The question concerns the concepts of explicit costs and implicit costs in the context of business decisions. In the scenario provided, Samarah quits a job paying $20,000 to run her own business, which pays her $30,000. The explicit cost of Samarah's time in the business is the actual salary she pays herself, which is $30,000. However, there is also an implicit cost, which is the foregone salary from her previous job. The implicit cost is the difference between what she earns now and what she could have earned if she had kept her previous job, which is $10,000 ($30,000 - $20,000).