Question

# Units Sold = 2,243 Explicit Costs =$3,901 Price per unit =$14 Implicit Costs $2,024 Calculate economic profit, given the cost data above. Do not include the " $ " symbol in your answer; do not use commas. Round to the nearest dollan. Question 2 Implicit Costs= $3,699 Price per unit −$146 II Units Sold - 544 Explicit Costs =$8,345 Calculate accounting profit, given the cost data above. Do not include the 7% symbol in your answer; do not use commas. Round to the nearest dollar.

Answer 1

To calculate economic profit, subtract both the explicit and implicit costs from total revenue. To calculate accounting profit, subtract only the explicit costs from total revenue.

Step-by-step explanation:

To calculate economic profit, you need to subtract both the explicit and implicit costs from the total revenue. In this case, the total revenue is $200,000, the explicit costs are $85,000, and the implicit costs are $125,000. So, the economic profit would be $200,000 - $85,000 - $125,000 = -$10,000 per year.

To calculate accounting profit, you only need to subtract the explicit costs from the total revenue. In this case, the total revenue is $1,000,000 and the explicit costs are $600,000 + $150,000 + $200,000 = $950,000. So, the accounting profit would be $1,000,000 - $950,000 = $50,000.