A small business owner earns $60,000 in revenue annually.The explicit annual costs equal $10,000.The owner could work for someone else and earn $25,000 annually.The owner's accounting profit is ________ and owner's economic profit is ________.

Question

Quizplus · Accepted Answer

Accounting profit is calculated as total revenue minus explicit costs, which is $60,000 - $10,000 = $50,000. Economic profit also considers opportunity costs, which include the $25,000 the owner could earn elsewhere, so it is $60,000 - $10,000 - $25,000 = $25,000.

A Small Business Owner Earns $60,000 in Revenue Annually