When an entrepreneur think about opening a business, direct costs come to their mind first. Direct costs are countable, such as, the wages for employees, the expenses of the products etc. On the other hand, most business openers are likely to fail to count the indirect costs or implicit costs of the business they start. In his article, “Grain Sorghum May Be More Profitable Than Corn In High Plains,” Bill Spiegel argues that the producers who produce grain sorghum get more profit than the producers who produce corn in high plains. The reason of this fact is that the producers depend on the availability of water. Spiegel mentions that researcher Zhanguo Xin says, “With the multiseed trait, we can get the same yield as corn, using about half the water. Less water and more profit is a win-win situation” (Spiegel, 1). This quote clearly shows that the outcome or the revenue from these two product are equal but the profit from these are different because of the differentiation in costs. Spiegel also supports his idea by mentioning that “Grain sorghum begins producing grain at 7 inches of moisture; corn requires 11 inches. Grain sorghum will produce more grain per inch of moisture up to about 24 inches, compared with corn” (1). Therefore, we can say that there is an indirect cost exist because the producer of corn spends more money the same amount of product than the producer who make grain sorghum. Also, corn takes more water than the equal amount of grain sorghum. Moreover, the producer of the corn is supposedly earn an accounting profit rather than earning an economic profit because they are failure to count the indirect cost of the water where they spend more water for their product than the same amount of grain
When an entrepreneur think about opening a business, direct costs come to their mind first. Direct costs are countable, such as, the wages for employees, the expenses of the products etc. On the other hand, most business openers are likely to fail to count the indirect costs or implicit costs of the business they start. In his article, “Grain Sorghum May Be More Profitable Than Corn In High Plains,” Bill Spiegel argues that the producers who produce grain sorghum get more profit than the producers who produce corn in high plains. The reason of this fact is that the producers depend on the availability of water. Spiegel mentions that researcher Zhanguo Xin says, “With the multiseed trait, we can get the same yield as corn, using about half the water. Less water and more profit is a win-win situation” (Spiegel, 1). This quote clearly shows that the outcome or the revenue from these two product are equal but the profit from these are different because of the differentiation in costs. Spiegel also supports his idea by mentioning that “Grain sorghum begins producing grain at 7 inches of moisture; corn requires 11 inches. Grain sorghum will produce more grain per inch of moisture up to about 24 inches, compared with corn” (1). Therefore, we can say that there is an indirect cost exist because the producer of corn spends more money the same amount of product than the producer who make grain sorghum. Also, corn takes more water than the equal amount of grain sorghum. Moreover, the producer of the corn is supposedly earn an accounting profit rather than earning an economic profit because they are failure to count the indirect cost of the water where they spend more water for their product than the same amount of grain