Theory of Cost

Suppose that a sole proprietors earning total revenue of Rs 1,20,000and is incurring explicit cost of R 90,000. If the owner could work for another company for Rs50,000 a year , we would conclude that: i. The firm incurring economic loss ii. The firm ids incurring economic profit iii. Total economic cost is Rs 210,000 iv. The firm is earning economic profit of Rs 30,000 How should I answer the above MCQ

Akshita  Prava

Akshita Prava

CA Foundation


09-Nov-20 08:42


Answers (2)

Total economic cost = 90K + 50K = 140K Total revenue is 120K Economic loss 20K

Sriram Somayajula

Sriram Somayajula


09-Nov-20 09:34

Economic cost= implicit cost+explicit cost here economic cost= 90,000+50,000=1,40,000 and revenue=1,20,000 a firm is having a economic loss of 20,000

Sai Sriram

Sai Sriram

CA Foundation


02-Dec-20 05:36