Suppose a dentist has total revenue of $320,000, and his total costs are $250,000 for the year. Also suppose the dentist left a job paying $112,000 a year to start his own practice. What is the dentist's economic profit?

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting all costs (including opportunity costs) from total revenue. In this case, the opportunity cost is the $112,000 salary the dentist gave up to start his own practice. 
Economic profit = total revenue - total costs - opportunity cost
Economic profit = $320,000 - $250,000 - $112,000
Economic profit = $42,000
Therefore, the best choice is B.

Suppose a Dentist Has Total Revenue of $320,000, and His