Suppose Marv,the owner-manager of Marv's Hot Dogs,earned $82,000 in revenue last year.Marv's explicit costs of operation totaled $36,000.Marv has a Bachelor of Science degree in mechanical engineering and could be earning $40,000 annually as mechanical engineer.

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Marv's total explicit costs are $36,000. In addition to this, we need to factor in the implicit cost of using owner-supplied resources, which in this case is the opportunity cost of Marv's potential earnings as a mechanical engineer, which is $40,000. Therefore, total economic costs are $76,000 ($36,000 explicit costs + $40,000 implicit costs). Marv's revenue is $82,000. Therefore, Marv's economic profit is $6,000 ($82,000 revenue - $76,000 economic costs).

Suppose Marv,the Owner-Manager of Marv's Hot Dogs,earned $82,000 in Revenue