Jill took $50 comma 000 that she had in savings and started her own business. if left in investments she would have earned $5 comma 000 this year. jill also left a job that paid her $60 comma 000 a year and plans on paying herself $40 comma 000. materials and other labor costs will be $70 comma 000. the company is located in a building that jill owns. she could have rented the building out for $30 comma 000 but plans on charging the company only the insurance and mortgage payment of $20 comma 000. what do the accounting and economic costs equal

accounting cost: 130,000

economic cost:   185,000

Explanation:

accounting cost: explicit cost of the business

Jill salary                                            40,000

other material and labor cost           70,000

insurance and mortgage payment   20,000

total accounting cost                       130,000

Economic cost: explicit cost + implicit cost whic are, the opportunity cost of the factors. cost of the best rejected option

accounting cost:   130,000

labor opportunity cost:  20,000

difference in salaries between Jill current wage and rejected labor

capital opportunity cost:   5,000 interest on saving

rent opportunity cost: 30,000

it would have receive 30,000 while currently receives 0.

total opportunity cost: 55,000

economic cost: 130,000 + 55,000 = 185,000

answer; tech (a) is correct;

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