Question

Maryann and Don want to open their own deli. To do so, Maryann must give up her job, at which she earns $20000 per year, and Don must give up his part-time job, at which he earns $10000 per year. They must liquidate their money market fund, which earns $1000 interest annually. The rent on the building is $10000 per year, and expenses for such necessities as utilities, corned beef, and pickles are $35000 annually. What is the explicit cost per year of operating the deli?

a. $31,000
b. $76,000
c. $35,000
d. $45,000
e. $10,000

Answer 1

d). $45,000

Step-by-step explanation:

The explicit cost includes payment made to suppliers and the costs which are incurred while running a business such as rent , wages and daily material expenses.

Explicit cost per year of operating deli = rent + expenses for necessities as utilities , corned beef and pickles = $10,000 + $35,000 = $45,000 per year.