Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information, what is the economic profit for Donnie's Donuts?

Question

Quizplus · Accepted Answer

To calculate economic profit, we need to subtract both the explicit and implicit costs from the revenues.

Economic profit = Revenues - Explicit costs - Implicit costs

= $800,000 - $450,000 - $200,000

= $150,000

Therefore, the economic profit for Donnie's Donuts is $150,000.

Donnie's Donuts Incurs $450,000 Per Year in Explicit Costs and $200,000