Suppose that a business incurred implicit costs of $250,000 and explicit costs of $500,000 in a specific year. If the firm sold 10,000 units of its output at $80 per unit, it's economic profit is 150,000 100,000 O 300,000 50,000

Suppose that a business incurred implicit costs of $250,000 and explicit costs of $500,000 in a specific year. If the firm sold 10,000 units of its output at $80 per unit, it's economic profit is 150,000 100,000 O 300,000 50,000

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 7PA

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Concept explainers

Accounting and Economic Profit analysis

One comes across the concept of Profits in the context of business and in analyzing the results of business activity. Profits of a business can be accounting profits, and they can also be economic profits. So how does one understand the concept of accounting versus economic profits?

Question

Suppose that a business incurred implicit costs of $250,000 and explicit costs of
$500,000 in a specific year. If the firm sold 10,000 units of its output at $80 per unit, it's
economic profit is
O 150,000
O 100,000
300,000
O 50,000

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