Karolina owns a small diner,where she works full-time in the kitchen.Her total revenue last year was $100,000,and her rent was $3,000 per month.She pays her one employee $2,000 per month,and the cost of ingredients and overhead averages $500 per month.Karolina could earn $35,000 per year as the manager of a competing diner nearby.Her total economic profit last year was

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Karolina's economic profit is calculated by subtracting both explicit and implicit costs from total revenue. Her explicit costs include rent ($36,000), employee salary ($24,000), and ingredients/overhead ($6,000), totaling $66,000. Her implicit cost is the forgone salary of $35,000. Total costs are $101,000, leading to an economic profit of -$1,000.

Karolina Owns a Small Diner,where She Works Full-Time in the Kitchen.Her