Question

On October 21, X-it Company bought a new delivery truck for $30,000. In calculating depreciation expense for the year ended December 31, X-it's accountant will assume that the truck was purchased on ______.

Answer 1

The firm's economic profit can be calculated by subtracting explicit costs and implicit costs from total revenue.

Step-by-step explanation:

The firm's economic profit last year can be calculated by subtracting the explicit costs and the implicit costs from the total revenue. In this case, the explicit cost is the rental value of the land owned by the firm, which is $30,000 per year. The implicit cost is the opportunity cost of using the land for the factory instead of renting it out.

To calculate the economic profit, subtract the explicit cost and the implicit cost from the total revenue earned by the firm. If the total revenue is higher than the combined explicit and implicit costs, the firm has a positive economic profit. If the costs exceed the revenue, the firm has a negative economic profit.

To determine the firm's economic profit last year, we need more information about the total revenue earned by the firm and any other costs incurred.