The Accompanying Table Outlines the Explicit and Implicit Costs Incurred

question 161

Essay

The accompanying table outlines the explicit and implicit costs incurred by a small graphic design company in France that takes in annual revenues equal to $250,000.

a.What would this company's accounting profits equal for a year?
b.What would this company's economic profits equal for a year?
c.What would we expect to happen in the long run for this market? Why?

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Definitions:

Service Revenue

Income earned from rendering services as opposed to income from selling goods.

Management Fee Revenue

Income earned by an entity for providing managerial services or advice to other companies.

Supplying Service

The act of providing a service to customers, clients, or inside an organization as opposed to delivering a tangible product.

Cost

The amount of money or resources expended to acquire an asset, service, or achieve a specific objective.