An economist left his $100,000-a-year teaching position to work full-time in his own consulting business. In the first year, he had total revenue of $200,000 and business expenses of $150,000. He made a(n):

Question

Quizplus · Accepted Answer

The economist's opportunity cost includes the $100,000 salary he gave up. His economic profit is calculated as total revenue ($200,000) minus total costs (explicit costs of $150,000 plus the implicit cost of $100,000), resulting in an economic loss of $50,000.

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