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Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:
- a)the firm is incurring an economic loss.
- b)implicit costs are Rs.50,000.
- c)the total economic costs are Rs.2,00,000.
- d)the individual is earning an economic profit of Rs.50,000.
Correct answer is option 'A'. Can you explain this answer?
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Suppose that a sole proprietorship is earning total revenues of Rs.2,0...
Explanation:
The given information states that a sole proprietorship is earning total revenues of Rs.2,00,000 and incurring explicit costs of Rs.1,50,000. Additionally, it is mentioned that the owner could work for another company and earn Rs.60,000 a year.
In order to determine whether the firm is incurring an economic loss or not, we need to consider both explicit and implicit costs.
Explicit Costs:
Explicit costs refer to the actual out-of-pocket expenses incurred by the firm in the production process. In this case, the explicit costs are given as Rs.1,50,000.
Implicit Costs:
Implicit costs refer to the opportunity costs of using resources in one way rather than in their next best alternative use. In this case, the implicit cost is the amount that the owner could earn by working for another company, which is Rs.60,000.
Now, let's calculate the total economic costs:
Total Economic Costs = Explicit Costs + Implicit Costs
Total Economic Costs = Rs.1,50,000 + Rs.60,000
Total Economic Costs = Rs.2,10,000
Comparison:
Comparing the total economic costs (Rs.2,10,000) with the total revenues (Rs.2,00,000), we can see that the firm is incurring a loss.
Therefore, the correct answer is option A - the firm is incurring an economic loss.
Summary:
To summarize, the given information suggests that the sole proprietorship is incurring explicit costs of Rs.1,50,000 and has an implicit cost of Rs.60,000. When we calculate the total economic costs by adding the explicit and implicit costs, we find that the firm's total economic costs amount to Rs.2,10,000. Since the total economic costs exceed the total revenues of Rs.2,00,000, it indicates that the firm is experiencing an economic loss.
The given information states that a sole proprietorship is earning total revenues of Rs.2,00,000 and incurring explicit costs of Rs.1,50,000. Additionally, it is mentioned that the owner could work for another company and earn Rs.60,000 a year.
In order to determine whether the firm is incurring an economic loss or not, we need to consider both explicit and implicit costs.
Explicit Costs:
Explicit costs refer to the actual out-of-pocket expenses incurred by the firm in the production process. In this case, the explicit costs are given as Rs.1,50,000.
Implicit Costs:
Implicit costs refer to the opportunity costs of using resources in one way rather than in their next best alternative use. In this case, the implicit cost is the amount that the owner could earn by working for another company, which is Rs.60,000.
Now, let's calculate the total economic costs:
Total Economic Costs = Explicit Costs + Implicit Costs
Total Economic Costs = Rs.1,50,000 + Rs.60,000
Total Economic Costs = Rs.2,10,000
Comparison:
Comparing the total economic costs (Rs.2,10,000) with the total revenues (Rs.2,00,000), we can see that the firm is incurring a loss.
Therefore, the correct answer is option A - the firm is incurring an economic loss.
Summary:
To summarize, the given information suggests that the sole proprietorship is incurring explicit costs of Rs.1,50,000 and has an implicit cost of Rs.60,000. When we calculate the total economic costs by adding the explicit and implicit costs, we find that the firm's total economic costs amount to Rs.2,10,000. Since the total economic costs exceed the total revenues of Rs.2,00,000, it indicates that the firm is experiencing an economic loss.
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Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer?
Question Description
Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer?.
Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer?.
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Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a year, we would conclude that:a)the firm is incurring an economic loss.b)implicit costs are Rs.50,000.c)the total economic costs are Rs.2,00,000.d)the individual is earning an economic profit of Rs.50,000.Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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