Final answer:
Economic profit is found by subtracting implicit costs from accounting profit. With an accounting profit of $20 million and implicit costs of $6 million, the economic profit is $14 million. The correct answer is option d
Step-by-step explanation:
When calculating economic profit, it is essential to consider both explicit and implicit costs. Accounting profit only takes into account the explicit costs, and is calculated as total revenues minus explicit costs. However, economic profit subtracts both types of costs from the total revenues.
To find the economic profit, you subtract the implicit costs from the accounting profit. Given the accounting profit of $20 million and implicit costs of $6 million, the calculation for economic profit would be:
Economic Profit = Accounting Profit - Implicit Costs
Economic Profit = $20 million - $6 million
Economic Profit = $14 million
Therefore, the correct answer to the question is d. $14 million.