Dr.Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic.His revenues for the first year are $500,000.He paid $90,000 in rent for the dental office,$60,000 for his office manager's salary,$24,000 for the dental hygienist,$150,000 for insurance,and $6,000 for other miscellaneous costs.The normal profit from running his business is $20,000.Which of the following statements is true?

Question

Quizplus · Accepted Answer

Explicit costs are the direct costs of operating the business, totaling $330,000 ($90,000 + $60,000 + $24,000 + $150,000 + $6,000). Implicit costs include the forgone salary of $150,000 and the normal profit of $20,000, totaling $170,000. Economic profit is calculated as total revenue minus total costs (explicit + implicit), which is $500,000 - ($330,000 + $170,000) = $0. Therefore, statements A, B, and C are correct.

DrKhan Starts His Own Dental Practice After Quitting His $150,000