Consider the following information about a business Diane opened last year: price = $10,quantity sold = 25,000; implicit cost = $55,000; explicit cost = $160,000.What was Diane's accounting profit?

Question

Quizplus · Accepted Answer

Accounting profit is calculated by subtracting explicit costs from total revenue (price x quantity sold) and does not include implicit costs. Thus, Diane's accounting profit can be calculated as:
Total revenue = price x quantity sold = $10 x 25,000 = $250,000
Total explicit costs = $160,000
Accounting profit = Total revenue - Total explicit costs = $250,000 - $160,000 = $90,000.

Consider the Following Information About a Business Diane Opened Last