Suppose that a sole proprietor is earning total revenue of ₹ 120,000/- and is incurring explicit cost of ₹ 95,000/-. If the owner could work for…

CA Foundation · Business Economics · PYQS · May 2025
Suppose that a sole proprietor is earning total revenue of ₹ 120,000/- and is incurring explicit cost of ₹ 95,000/-. If the owner could work for another company for ₹ 30,000/- a year, which of the following statement is false?
(A) A. The firm incurred an economic loss of ₹ 5,000/-
(B) B. The firm is having accounting profit of ₹ 25,000/-
(C) C. Total economic costs are ₹ 30,000/-
(D) D. The total accounting costs are ₹ 95,000/

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Total economic costs are ₹ 30,000/-

Topics: Theory of Production and Cost

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