Question

A business owner makes 50 items by hand in 40 hours. She could have earned $20 an hour working for someone else. Her total explicit costs are $200. If each item she makes sells for $15, her economic profit equals ____.

If you are entering a negative number be sure to include a negative sign (-) in front of that number.

Answer 1

- $250

Step-by-step explanation:

The computation of the economic profit is shown below:

= Total revenues - explicit cost - implicit cost

where,

Total revenues = Explicit revenue × implicit revenue

= $15 × 50 items

= $750

Explicit cost = $200

Implicit cost = $20 × 40 hours = $800

Now put these values to the above formula

So, the value would be equal to

= $750 - $200 - $800

= - $250