ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A firm produces 400 books and sells each book for $15. If the explicit cost of producing the books is $4, 500 and the implicit cost is $1, 000, the firm’s economic profit is:
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$0
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$500
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$1, 000
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$1, 500
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Explanation:
Detailed explanation-1: -The answer is B. The economic profit is 500 because it is equal to 6000-4500-100 = 500. The total revenue is 6000, the explicit costs are 4500 and the implicit costs are 1000. The economic profit is equal to the total revenue minus explicit costs minus implicit costs.
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