Suppose your local Walmart has explicit financial costs of $5 million per year and implicit opportunity costs of $174,000 per year. If the store earned an economic profit of $202,000 last year, the store's accounting profit was:
A)$5.202 million.
B)$28,000.
C)$376,000.
D)$5.174 million.

Question

Quizplus · Accepted Answer

Accounting profit is calculated by subtracting explicit costs from total revenue. Given the economic profit of $202,000 (which accounts for both explicit and implicit costs), and the implicit costs of $174,000, we add these together to find the accounting profit: $202,000 + $174,000 = $376,000.

Suppose Your Local Walmart Has Explicit Financial Costs of $5