
Brian H. answered 09/30/13
Certified and Licensed: Economics, Finance, Business + Social Sciences
Joseph S.
asked 07/26/13Price=$20, Quantity=400units, Unit cost=$15, implicit cost=$4,000
Please explain your answer.
Brian H. answered 09/30/13
Certified and Licensed: Economics, Finance, Business + Social Sciences
Nataliya D. answered 07/26/13
Patient and effective tutor for your most difficult subject.
Accounting Profit is equal to total revenue minus explicit costs:
($20 - $15) × 400 = $2,000
Economic Profit = Total revenue - Total economic cost
Total economic cost = Explicit costs (firm’s actual cash payments for inputs) + implicit costs (opportunity costs of non-purchased inputs, such as entrepreneur’s time or money)
$2,000 - $4,000 = - $2,000
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