Lauren is the owner of a bakery that earns 0 (zero)economic profit.Last year,her total revenue was $145,000,her rent was $12,000,her labor costs were $65,000,and her overhead expenses were $15,000.From this information,we know that her total implicit costs were:

Question

Quizplus · Accepted Answer

Economic profit is total revenue minus total costs (both explicit and implicit). Since Lauren's economic profit is zero, her total revenue equals her total costs. Her explicit costs (rent, labor, overhead) sum to $92,000. Therefore, her implicit costs must be $53,000 to make total costs equal to total revenue of $145,000.

Lauren Is the Owner of a Bakery That Earns 0