Question
upstudy study bank question image url

\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}

Ask by Long Best. in the United States
Mar 15,2025

Upstudy AI Solution

Tutor-Verified Answer

Answer

The implicit cost is \$50,000, which is option C.

Solution

Sign in to Unlock Answers for Free!

A Learning Platform Trusted by Millions of Real Students and Teachers.

star-icon Unlock

Answered by UpStudy AI and reviewed by a Professional Tutor

Extra Insights

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!

Related Questions

Latest Economics Questions

Try Premium now!
Try Premium and ask Thoth AI unlimited math questions now!
Maybe later Go Premium
Study can be a real struggle
Why not UpStudy it?
Select your plan below
Premium

You can enjoy

Start now
  • Step-by-step explanations
  • 24/7 expert live tutors
  • Unlimited number of questions
  • No interruptions
  • Full access to Answer and Solution
  • Full Access to PDF Chat, UpStudy Chat, Browsing Chat
Basic

Totally free but limited

  • Limited Solution
Welcome to UpStudy!
Please sign in to continue the Thoth AI Chat journey
Continue with Email
Or continue with
By clicking “Sign in”, you agree to our Terms of Use & Privacy Policy