\begin{tabular}{l} 2) Lauren runs a chili restaurant in San Francisco. Her total revenue \\ last year was \( \$ 110,000 \). The rent on her restaurant was \( \$ 48,000 \), her \\ labor costs were \( \$ 42,000 \), and her materials, food and other variable \\ costs were \( \$ 20,000 \). Lauren could have worked as a biologist and \\ earned \( \$ 50,000 \) per year. An economist calculates her implicit costs \\ as \\ OA) \( \$ 150,000 \). \\ OB) \( \$ 63,000 \). \\ OC) \( \$ 50,000 \). \\ OD) \( \$ 110,000 \). \\ OE) \( \$ 0 \) because Lauren did not work as a biologist. \\ \hline\end{tabular}

Did you know that implicit costs are often less tangible than explicit costs but can significantly impact economic decision-making? In Lauren's case, her implicit costs comprise the foregone income she could have earned as a biologist, which is \( \$ 50,000 \). This is key in evaluating her true profits from the restaurant, as it reflects the opportunity cost of her choice! Now, for a common pitfall when analyzing business finances: many forget to include implicit costs in their calculations. In this scenario, although Lauren's explicit costs sum up to \( \$ 110,000 \), we must factor in her potential earnings to fully grasp her financial standing. Remember, effective decision-making hinges on understanding the complete picture of costs and revenues!