Question

If the total costs of producing 1,500 units of output is $13,500 and this output sold to consumers for a total of $18,000, then the firm would earn economic profits of

Answer 1

$4500

Step-by-step explanation:

The Economic profit is the difference between the total revenue and the explicit and implicit cost.

Hence,

Economic profit = (Total revenue - explicit cost - implicit cost)

Explicit cost =$13500

Total revenue = $18,000

Since, implicit cost isn't given, implicit cost will be taken as zero

Hence,

Economic profit = ($18,000 - $13,500)

Economic profit = $4,500