Question

Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce Refer to Scenario 13-6. An economist would calculate Ziva's total cost of farming to equal O A. $300 B. $250 O C. $130 C.$130 D. $380

Answer 1

Answer:

$380

Explanation:

Ziva's total cost of farming is composed of two different costs: explicit and implicit costs.

Explicit cost is an out-of-pocket cost that a person incurs to carry out a particular business activity. It is sort of, a business-related expense for which the business pays. In Ziva's case, it is $130, the cost of the seeds

Implicit costs are opportunity costs. An opportunity cost refers the benefits an individual, investor or business misses out on when opting for one alternative in preference of another. In our case, it amounts to $250($25*10 hours)

Thus, Ziva's cost of farming

= $130 +( $25*10) = $130 +$250 = $380