An economist left her $100,000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200,000 and business expenses of $100,000. She made a(n):

Question

Quizplus · Accepted Answer

The economist's economic profit is calculated by subtracting both explicit and implicit costs from total revenue. Her implicit cost is the $100,000 salary she gave up, and her explicit cost is the $100,000 business expenses. Total costs are $200,000, which equals her total revenue, resulting in zero economic profit.

An Economist Left Her $100,000-A-Year Teaching Position to Work Full-Time