Tommy's Teddy Bears incurs $300,000 per year in explicit costs and $50,000 in implicit costs.The shop earns $600,000 in revenues and has $1.1 million in net worth.Based on this information,what is economic profit for Tommy's Teddy Bears?

Question

Quizplus · Accepted Answer

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

Total explicit and implicit costs = $300,000 + $50,000 = $350,000

Total revenue = $600,000

Economic profit = Total revenue - Total explicit and implicit costs

= $600,000 - $350,000

= $250,000

Therefore, the economic profit for Tommy's Teddy Bears is $250,000. Option A is the correct answer.

Tommy's Teddy Bears Incurs $300,000 Per Year in Explicit Costs