Question

Jessica Simpson has decided to open a small fast food place that specializes in buffalo wings. To do so she must resign from her current full time position that pays her $40,000/year and take over a small store-front building that she already owns but currently rents to her brother, Homer, for $6,000/year. Her annual expenses at the restaurant will be $50,000 for the food and $2,000 for gas and electricity. What are her implicit costs?

Answer 1

$46,000

Step-by-step explanation:

The computation of the implicit cost is shown below:

= Paying amount + rent expense to her brother

= $40,000 + $6,000

= $46,000

The implicit cost is that cost which is the sacrifice for the benefit generated from another thing. It is like an opportunity cost

Simply we added the paying amount and the rent expense which is given to her brother