Question

A young Thomas Edison produces and sells 20 light bulbs a week in his dorm room. The parts for each light bulb cost $2.00. He sells each light bulb for $5.00. General Electric offers Thomas an executive job that pays $50.00 a week. Thomas’s weekly economic profit from making light bulbs is equal to:

Answer 1

Thomas's weekly economic profit from making light bulbs is $60.00.

Step-by-step explanation:

Thomas's weekly economic profit from making light bulbs can be calculated by subtracting the total cost from the total revenue. The cost of producing one light bulb is $2.00 and he sells each light bulb for $5.00. Therefore, his revenue from selling 20 light bulbs in a week is $5.00 x 20 = $<<5*20=100.00>>100.00. The total cost for producing 20 light bulbs is $2.00 x 20 = $<<2*20=40.00>>40.00. Therefore, his weekly economic profit is $100.00 - $40.00 = $<<100-40=60.00>>60.00.

Answer 2

Economic profit = $10

Step-by-step explanation:

given data

sells = 20 light bulbs

parts for light bulb cost = $2.00

sells each light bulb = $5.00

pays = $50.00

to find out

Thomas weekly economic profit

solution

we know that Economic profit is here as

Economic profit = Total revenue - explicit cost - implicit cost ...........1

and

Total revenue is = $5 × 20 light bulbs

Total revenue is = $100

and

we know that explicit costs is the costs that is involving actual monetary payment like that wages, rent etc

so

Implicit costs is cost that is not involving monetary payment like wage and foregone

so that from equation 1

Economic profit = $100 - ($2 ×20) - $50

Economic profit = $10