Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year.If the firm sold 4,000 units of its output at $300 per unit,its accounting profits were:

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Quizplus · Accepted Answer

Accounting profit is calculated by subtracting explicit costs from revenue, which is $200,000. Economic profit takes into account both explicit and implicit costs, which is $0 in this case ($1 million explicit costs + $200,000 implicit costs = $1.2 million total costs, equaling revenue of $1.2 million). Therefore, the business has zero economic profit.

Suppose That a Business Incurred Implicit Costs of $200,000 and Explicit