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Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329

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BuyFindarrow_forward

Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329
Chapter 11, Problem 2P
Textbook Problem
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As a farmer, you work for yourself using your own tractor, equipment, and farm structures, and you cultivate your own land. Why might it be difficult to calculate your profits from farming?

To determine

The reasons it might be difficult to calculate profits from farming for a farmer who uses his own tractor, equipments, farm structures and cultivates his own land.

Explanation of Solution

Implicit costs are costs that are not directly incurred in terms of money. For example, if an entrepreneur uses his own apartment as his office, then the imputed rent of the apartment would be considered as an implicit cost.

Similarly, if a farmer uses his own tractor, equipments, and farm structures and cultivates his own land, it would be difficult for him to measure exact profits from farming becau...

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