Use the following scenario to answer the following questions:
Carmela's Churros is a perfectly competitive firm that sells desserts in Houston,Texas.Carmela's Churros currently is taking in $40,000 in revenues,and has $15,000 in explicit costs and $25,000 in implicit costs.
-Carmela's Churros' economic profits are
A) $40,000.
B) $15,000.
C) $25,000.
D) $0.
E) $80,000.

Question

Quizplus · Accepted Answer

To calculate economic profit, we subtract both explicit and implicit costs from total revenue. Therefore, economic profit for Carmela's Churros would be:
$40,000 (revenue) - $15,000 (explicit costs) - $25,000 (implicit costs) = $0
Thus, the best choice is D.

Use the Following Scenario to Answer the Following Questions