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A doctor has worked as a general practitioner for several years, earning an annual salary of $150,000. They are now deciding whether they want to open their own private practice or continue as a team member in the existing office. One- time start-up costs for the practice would be $100,000. If they open their own practice, they will receive a salary of $50,000 from the business annually until the practice is well—established. They anticipate the practice will take two years to become fully established. They paid $200,000 for medical school. They should open their own practice if the future benefits exceed:
A doctor has worked as a general practitioner for several years, earning an annual salary of $150,000. They are now deciding whether they want to open their own private practice or continue as a team member in the existing office. One- time start-up costs for the practice would be $100,000. If they open their own practice, they will receive a salary of $50,000 from the business annually until the practice is well—established. They anticipate the practice will take two years to become fully established. They paid $200,000 for medical school. They should open their own practice if the future benefits exceed:
Final answer:The doctor should open their own practice if their future benefits exceed their total costs, including explicit ($100,000 start-upcostsand $50,000 annual salary for two years) and implicit costs ($150,000 annual salary from general practice for two years). Whether they should go ahead with opening the practice depends on the expected future returns of the practice.Explanation:This question pertains to the subject ofopportunitycosts and explicit costs in business. If the doctor decides to open their own practice, they will have to quit their current job that pays $150,000 annually, which will be an implicit cost of opening their practice. This is the income they forego by not working as a general practitioner. Explicit costs here would be the $100,000 one-time start-up costs for their practice and the annual salary of $50,000 for two years.It will only be beneficial for them to open thepracticeif their future benefits exceed their total costs, both explicit ($100,000 + $50,000x2) and implicit ($150,000x2). Therefore, if they believe that the practice will generate greater returns in the future, they should consider it as a viable option. Conversely, if they feel that the income as a general practitioner would outweigh the future profits, it would be more prudent to remain as a general practitioner.Learn more about Opportunity Cost here:brainly.com/question/32971162#SPJ2...