Suppose a company incurs the following costs: labor, $700; equipment, $300; and materials, $200. The company owns the building, so it doesn’t have to pay the usual $1,000 in rent.
Instructions: Enter your responses as a whole number.
(a) What is the total accounting cost?
(b) What is the total economic cost?
(c) If the company sold the building and then leased it back, what would be the new
(i) Accounting costs?
(ii) Economic costs?