Brad worked as a contractor for a year, earned revenues of $120,000, and incurred an explicit cost of $70,000. If he could have earned $80,000 working for a computer company, his accounting profit as a contractor would be _____.

Question

Quizplus · Accepted Answer

Accounting profit is calculated by subtracting explicit costs from total revenues. In this case, Brad's accounting profit is $120,000 (revenues) - $70,000 (explicit costs) = $50,000. The opportunity cost of not working for the computer company is not considered in accounting profit calculations.

Brad Worked as a Contractor for a Year, Earned Revenues