If Jamaican Hot Pies Café generates $200,000 in revenues and $150,000 in explicit costs, and incurs $30,000 in implicit costs, the café is earning _____ in accounting profits and _____ in economic profits.

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Quizplus · Accepted Answer

Accounting profits are calculated by subtracting explicit costs from revenues, which is $200,000 - $150,000 = $50,000. Economic profits take into account both explicit and implicit costs, so they are calculated as $200,000 - $150,000 - $30,000 = $20,000.

If Jamaican Hot Pies Café Generates $200,000 in Revenues and $150,000