Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year, the explicit costs of her business are $17,000, and the opportunity costs of her business are $22,000.What is her economic profit?

Question

Quizplus · Accepted Answer

To calculate the economic profit, we need to subtract both implicit and explicit costs from the revenue.
Economic Profit = Total Revenue - Explicit Costs - Implicit Costs
Implicit Costs = Opportunity Costs
Given that,
Total Revenue = $64,000
Explicit Costs = $17,000
Implicit Costs = $22,000
Therefore, 
Economic Profit = $64,000 - $17,000 - $22,000 = $25,000
Thus, the economic profit is $25,000. And, the best choice is B.

Tanesha Sells Homemade Candles Over the Internet