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HW_7 - ECO 108 Introduction to Economics Problem Set...

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ECO 108: Introduction to Economics Problem Set 7 (Chapter 8) Professor: Shanjun Li 1 Explicit costs A) are the only costs that matter to business owners. B) usually exceed implicit costs. C) are difficult to measure. D) appear on the firm's balance sheet. E) tend to be less than implicit costs. 2. Implicit costs 3. If a firm is earning zero economic profits Use the following to answer questions 4-8: Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment. 4. What is Pat's explicit cost? 5.Pat's opportunity cost of running his own business is______ which is the_______. A) $ 16,000; explicit cost D) $ 51,000; economic cost B) $ 16,000; accounting cost E) $ 51,000; total cost C) $ 35,000; implicit cost
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