Suppose that Rosa is considering migration to another country. To move, she will have to spend $5,000 on transportation and $4,000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa's implicit cost of migrating is Multiple Choice $9,000. $500,000 $5,000 $509,000.

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Business

Sheldon Wong

4 February, 06:40

Suppose that Rosa is considering migration to another country. To move, she will have to spend $5,000 on transportation and $4,000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa's implicit cost of migrating is Multiple Choice $9,000. $500,000 $5,000 $509,000.

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Answers (1)

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Matias Decker · Answer 1

Option (B) is correct.

Explanation:

Implicit costs refers to the opportunity cost that is associated with the selection of the alternative.

In this question, the Rosa wants to migrate to another country, if she do so then she have to foregone her earnings in the home country.

Therefore, Rosa's stream of future earnings in her home country is $500,000 and it is considered as implicit cost. She give up this much of income to earn $800,000.

Explicit costs includes:

(i) Transportation = $5,000

(ii) Application and other processing fees = $4,000