What is the familys accounting cost?
Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. What is the familys accounting cost? What is the familys economic cost? Could the familys economic cost ever exceed its accounting cost? Why or why not?
