Suppose a soccer coach has been making $25, 000 per year but gives up his coaching job in order to make lace doilies.If his revenue from the sale of these doilies is $50, 000 and his materials cost $20, 000, then his economic profit is
A)$5, 000
B)$25, 000
C)$30, 000
D)$50, 000
E)$80, 000

Question

Quizplus · Accepted Answer

Economic profit is calculated as total revenue minus total costs, including opportunity costs. The coach's revenue is $50,000, and his explicit cost is $20,000. His opportunity cost (the salary he gave up) is $25,000. Thus, economic profit = $50,000 - $20,000 - $25,000 = $5,000.

Suppose a Soccer Coach Has Been Making $25, 000 Per