1. Jason has long wanted to drive as an independent trucker, but the rental price for the truck Jason wanted is $6,000 per month and that was more than he could afford. For his 30^th birthday, Jason’s father bought Jason the truck as a gift. Jason started driving the new truck as an independent trucker and was earning revenues of $18,000 a month with expenses of $13,000 a month (excluding any salary). He was recently bragging to a friend that he was clearing $5,000 a month from his business, which was better than the $4,000 a month he was making as a truck driver for his former employer, Global Shipping.

1. What are Jason’s explicit costs each month?

1. What are Jason’s implicit costs each month?

1. What is Jason’s economic profit each month? From a purely economic standpoint, evaluate the success of Jason’s business.

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Hmm... I'm confused on whether Jason's explicit costs should include the $6000? Since the truck was purchased by his dad, does that mean rental fees are excluded from explicit costs? So the total explicit costs should amount to $13,000 ? I'm very confused about the implicit costs as well.. Does the implicit costs refer to the opportunity costs forgone if he did not drive as an independent trucker? If this is the case, then implicit costs should be 5000?

Quote:

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Originally Posted by Curlyben

What do YOU think ?
While we're happy to HELP we wont do all the work for you.
Show us what you have done and where you are having problems..

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Hmm... I'm confused on whether Jason's explicit costs should include the $6000? Since the truck was purchased by his dad, does that mean rental fees are excluded from explicit costs? So the total explicit costs should amount to $13,000 ? I'm very confused about the implicit costs as well.. Does the implicit costs refer to the opportunity costs forgone if he did not drive as an independent trucker? If this is the case, then implicit costs should be 5000?

Look at this. What were the costs Jason incurred?

http://www.differencebetween.net/bus...explicit-cost/

explicit costs = 6000+13000 = 18000
implicit costs = 4000