Implicit Cost

Priya is deciding between opening one of two businesses — she can only run ONE. If she opens a coffee shop, she expects to bring in $200,000 in revenue, while paying $90,000 in rent and $50,000 in materials each year. If she opens a bookstore instead, she expects $150,000 in revenue, with $40,000 in rent and $40,000 in materials each year. If Priya opens the coffee shop, what is the implicit cost of doing so?

Jenna withdrew $50,000 from her brokerage account, where it was earning a steady 8% annual return, to invest into her new food truck business. The food truck generated $120,000 in revenue this year. What is the implicit cost to Jenna from using her own money to fund the business for one year?

Select ALL of the following that are examples of an implicit cost.

Devon decided to spend his Saturday afternoon mowing his own lawn. Had he not mowed the lawn, he could have done one of the following instead:

• Worked an extra shift at his job and earned $80
• Tutored a neighbor’s kid for $50
• Sold old furniture at a yard sale for $30
• Relaxed at home (no monetary value)

What is the implicit cost of Devon mowing his own lawn?