If explicit costs equal $157,000, implicit costs equal $95,000, and accounting profit equals $23,000, it follows that total revenue equals __________ and economic profit equals __________.
A)$75,000; $17,000
B)$180,000; -$72,000
C)$68,000; $25,000
D)$118,000; -$72,000
E)There is not enough information given to answer this question.

Question

Quizplus · Accepted Answer

DAccounting profit is calculated as total revenue minus explicit costs. Given that accounting profit equals $23,000 and explicit costs equal $157,000, total revenue can be calculated as $23,000 + $157,000 = $180,000. Economic profit takes into account both explicit and implicit costs, so it is calculated as total revenue minus explicit costs minus implicit costs, which equals $180,000 - $157,000 - $95,000 = -$72,000. Both B and D mention the correct total revenue of $180,000, but only B correctly states the economic profit as -$72,000. Therefore, the correct answer is B.

If Explicit Costs Equal $157,000, Implicit Costs Equal $95,000, and Accounting