Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct?
A)Sebastian's total explicit costs are $15,400.
B)Sebastian's total implicit costs are $55,600.
C)Sebastian's accounting profit is $35,000.
D)Sebastian's economic profit is $4,600.

Question

Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct? ​
A)​Sebastian's total explicit costs are $15,400.
B)​Sebastian's total implicit costs are $55,600.
C)​Sebastian's accounting profit is $35,000.
D)​Sebastian's economic profit is $4,600.

Quizplus · Accepted Answer

The Answer of Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct? ​
A)​Sebastian's total explicit costs are $15,400.
B)​Sebastian's total implicit costs are $55,600.
C)​Sebastian's accounting profit is $35,000.
D)​Sebastian's economic profit is $4,600.

Sebastian Decides to Open a Tree Farm