Question

A business owner makes 1000 items a day. each day he/she contributes 8 hours to produce those items. if hired, elsewhere he/she could have earned $250 an hour. the item sells for $15 each. production does not stop during weekends. if the explicit costs total $150,000 for 30 days, the economic profit for the month equals:

Answer 1

Accounting profit = total revenue - explicit cost

Total revenue = 1000 * 30 * 15 = 450,000

Explicit cost = 150,000

Accounting profit = 450,000 – 150,000 = 300,000

therefore, The economic profit for the month is 300,000