Suppose that during a given time period the implicit cost for a business was $1,000 and that the explicit cost was $5,000. Also suppose that the firm sold 1,000 units of its products at $5 per item. We can conclude that the firm's

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Quizplus · Accepted Answer

The accounting profit is calculated as total revenue minus explicit costs. In this case, the accounting profit is $4,000 ($5,000 in revenue minus $1,000 in explicit costs). 
However, to calculate economic profit, we need to take into account implicit costs as well. Economic profit is calculated as total revenue minus both explicit and implicit costs. In this case, the economic profit is -$1,000 ($5,000 in revenue minus $1,000 in explicit costs minus $5,000 in implicit costs). Therefore, the best choice is D.

Suppose That During a Given Time Period the Implicit Cost