Answer
$\$40,000$
$\$8000$
Work Step by Step
Opportunity cost of the entrepreneur’s time:
The person gave up a job paying \$40,000 per year.
So, the implicit cost of time = \$40,000.
Opportunity cost of the entrepreneur’s funds:
The person withdrew \$100,000 from a money-market account earning 8% per year.
So, the implicit cost of funds = 100,000 × 0.08 = \$8,000.
Answer (filled in blanks):
The implicit cost of the business is \$40,000 for the entrepreneur’s time plus \$8,000 for the entrepreneur’s funds.
