Sue owns a baking company. The company's total revenue for a month is $4000. The monthly costs of resources bought in the market and of resources owned by the firm are $2000 and monthly costs of resources supplied by the owner are $1000. Sue's economic profit for the month is equal to

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting both explicit and implicit costs from total revenue. Here, explicit costs are $2000, and implicit costs (resources supplied by the owner) are $1000. Therefore, economic profit is $4000 - $2000 - $1000 = $1000.

Sue Owns a Baking Company