Suppose the entrepreneur could earn $1,000 as an employee elsewhere. This means the accounting profit is

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The accounting profit is calculated as total revenue minus explicit costs. Here, total revenue is $1,500 and explicit costs are $575, which gives an accounting profit of $925 ($1,500 - $575). Since the entrepreneur could earn $1,000 as an employee elsewhere, this means that their opportunity cost (implicit cost) is $1,000. Therefore, if we include the opportunity cost in the calculation, the economic profit would be -$75 ($925 accounting profit - $1,000 implicit cost). In this case, the entrepreneur would be better off taking a job as an employee elsewhere.

Suppose the Entrepreneur Could Earn $1,000 as an Employee Elsewhere