If the explicit costs to a firm to produce a unit of output are $6 and the firm sells 200,000 units of output for $9 per unit, the accounting profit received by the producer is

Question

Quizplus · Accepted Answer

Accounting profit is calculated as total revenue minus explicit costs. Total revenue is $9 per unit times 200,000 units, which equals $1.8 million. Total explicit costs are $6 per unit times 200,000 units, which equals $1.2 million. Therefore, accounting profit is $1.8 million - $1.2 million = $600,000.

If the Explicit Costs to a Firm to Produce a Unit