Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make soccer shoes.If his revenue from the sale of these shoes is $50,000 and his materials cost $20,000,then his economic profit is equal to _____
A)$5,000.
B)$25,000.
C)$30,000.
D)$50,000.
E)$80,000.

Question

Quizplus · Accepted Answer

Economic profit is calculated as total revenue minus total costs, including both explicit and implicit costs. Here, the explicit cost is $20,000 for materials, and the implicit cost is the $25,000 salary he gave up. So, economic profit = $50,000 (revenue) - $20,000 (materials) - $25,000 (opportunity cost) = $5,000.

Suppose a Soccer Coach Has Been Making $25,000 Per Year