Suppose a person quits a job earning $45 comma 000 per year and starts a business with $175 comma 000 withdrawn from a money-market account earning 12 percent per year. The implicit cost of the business is for the entrepreneur’s time plus for the entrepreneur’s funds.

$45,000 and $21,000

Explanation:

The computation of the implicit cost and the extra amount is shown below:

Implicit cost means the cost of opportunity lost so quitting job means opportunity cost.

Therefore,

The implicit cost of the business is $45,000 per year for the entrepreneur’s time plus the amount is $21,000 for the fund of entrepreneur

= $175,000 × 12%

= $21,000

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housewives doing day to day to work like cooking, laundry and so on.

a person doing a work for hobby like gardening, fishing, painting and so on.

work done for charity like taking tuition classes of poor children, providing free services to earthquake victims, a blind man in crossing road and so on.

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