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Questions and Answers
What were the total revenues Milo earned from selling the cookies?
What were the total revenues Milo earned from selling the cookies?
- $1,000 (correct)
- $1,200
- $800
- $700
What was the total cost incurred by Milo for selling the cookies, including both explicit and implicit costs?
What was the total cost incurred by Milo for selling the cookies, including both explicit and implicit costs?
- $1,400 (correct)
- $700
- $1,000
- $900
What is the implicit cost of baking the cookies for Milo?
What is the implicit cost of baking the cookies for Milo?
- $200
- $700
- $600
- $400 (correct)
What is the accounting profit calculated after considering explicit costs only?
What is the accounting profit calculated after considering explicit costs only?
Considering both explicit and implicit costs, how much profit or loss did Milo experience?
Considering both explicit and implicit costs, how much profit or loss did Milo experience?
What was the total revenue generated from selling the 100 boxes of cookies?
What was the total revenue generated from selling the 100 boxes of cookies?
What is the implicit cost of Milo taking time off from their job?
What is the implicit cost of Milo taking time off from their job?
What is Milo's total explicit cost for baking the cookies?
What is Milo's total explicit cost for baking the cookies?
If Milo had sold each box for $15 instead of $10, what would the new total revenue be?
If Milo had sold each box for $15 instead of $10, what would the new total revenue be?
What is the total cost incurred by Milo when considering both explicit and implicit costs?
What is the total cost incurred by Milo when considering both explicit and implicit costs?
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Study Notes
Revenue
- Milo sold 100 boxes of cookies at $10 per box
- Total revenue: 100 x 10=10 = 10=1000
Explicit Costs
- Explicit costs are the direct costs of production, such as ingredients, packaging and labels.
- Explicit costs: $700
Implicit Costs
- Implicit costs are opportunity costs. These are the costs of the resources the entrepreneur uses but doesn't pay for directly.
- Milo's implicit cost includes lost wages while baking the cookies.
- Implicit costs: 20 hours x 20perhour=20 per hour = 20perhour=400
Accounting Profit
- Accounting profit is calculated as total revenue minus explicit costs.
- Accounting profit: 1000−1000 - 1000−700 = $300
Economic Profit
- Economic profit is calculated as total revenue minus both explicit and implicit costs.
- Economic profit: 1000−1000 - 1000−700 - 400=−400 = -400=−100
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