Question

Assume an apple farmer incurs the following costs and revenues: Fertilizer: S200 Seeds: $75 Water: $250 Wages: $750 Property taxes: S600 Interest payments on borrowed funds. $1.200 Sales of apples $4.000 Table 22.1 Suppose the entrepreneur could earn $1,000 as an employee elsewhere. This means the accounting profit is $925 -$75 -$1.000 $1.525

Answer 1

Answer: $925 Workings: Accounting Profit: Revenue Sales of apples Less: Explicit costs Fertilizer $4,000 $200 Seeds $75 Water $250 Wages $750 Property taxes Interest payments $600 on borrowed $1,200 S3,075 funds Profit $925 Note: The entrepreneur could earn S1,000 as an employee, $1,000 is an implicit cost and does not impact accounting profit.