If revenues are $60,000, explicit costs are $40,000 and implicit costs are $10,000, then economic and accounting profit are, respectively:
A) $10,000 and $20,000.
B) $10,000 and $30,000.
C) $20,000 and $10,000.
D) $20,000 and $30,000.

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting both explicit and implicit costs from revenues, which gives $60,000 - $40,000 - $10,000 = $10,000. Accounting profit only subtracts explicit costs from revenues, resulting in $60,000 - $40,000 = $20,000.

If Revenues Are $60,000, Explicit Costs Are $40,000 and Implicit