What is the attributed price?
Impotated costs, also referred to as the cost of an opportunity, is a concept based on economic theory, which essentially states that to obtain something that one has to give up in return. For example, to get a four -year full -time education education, may have to give up the opportunity to work full -time and earn $ 20,000 in US dollars (USD) per year. $ 20,000 is an imputed price. In the calculation of economic profit, the concept of costs is necessary. This is derived by obtaining a net accounting profit or loss and deduction of the loaded costs.
The theory that is worth admitted costs is a compromise. The theory of compromises basically states that virtually everything comes with some type of price tag. For example, to create and maximize wealth, some companies can participate in activities that damage the environment. In order to fight this, governments can carry out environmental protection laws that can reduce pollution and againE can people from and a polluted environment. However, the impoted costs associated with this may be an increase in production costs for companies, which can result in less profits and less jobs, among other things.
As one of the different concepts of the economy, the admitted costs are associated with many other concepts and procedures in economics and business. These include concepts such as cost and benefits analysis, economic profit and loss of hobby. The analysis of costs and benefits is essentially the act of business decisions after considering all viable options and consideration of all direct and indirect advantages and disadvantages. In general, after performing such an analysis, the company chooses the option that serves its purpose most.
Economic profit differs from accounting profits, because in its calculation it considers both explicit and implicit costs, while the accounting profit applies only to tangible or explicit costs. To illustrate the napConsider a company that buys a machine whose main purpose is to produce specific items. Suppose the company rents a machine that brings an annual net income of $ 20,000. On the other hand, if the company went with an alternative, producing items and selling them, it would earn a net income of $ 25,000. In such a scenario, the economic loss of the company would be $ 5,000, so the company would not earn any economic profit.
Most often people are engaged in activities from which they gain personal pleasure. If these activities do not produce income regularly, then they are considered hobbies. Any loss eligible when involved in these activities is referred to as a loss of a hobby and cannot be requested when filing a tax return. Theoretically, the hobby losses are enhanced on the basis of imputed costs. This is, for example, an individual can cause a hobby loss, while the entertainment would be the first to be spent on earning wages.