Last year, Dr. Lopez quit his $100,000 job at the MegaMall Dental Clinic and opened his own dental practice. His revenue for the first year was $400,000. He paid $80,000 in rent for the dental office, $60,000 for his office manager’s salary, $25,000 for the dental hygienist, $150,000 for insurance, and $10,000 for other miscellaneous expenses. Based on this information, which of these statements is correct?

D) All of the above are correct.

Explanation:

Implicit costs are the opportunity costs which refers to the value of the next best alternative to the current decision path. As Dr. Lopez quit a job that was paying $100,000 in order to open this practice, that would be his implicit costs.

His accounting profit is;

= Revenue - expenses

= 400,000 - 80,000 - 60,000 - 25,000 - 150,000 - 10,000

= $75,000

His economic profit;

= Accounting profit - Implicit costs

= 75,000 - 100,000

= -$25,000

b is the correct answer

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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