A business owner makes 50 items by hand in 40 hours. She could have earned $20 an hour working for someone else. Her total explicit costs are $200. If each item she makes sells for $15, her economic profit equals what?

Question

Business

Sassy

2 January, 23:17

A business owner makes 50 items by hand in 40 hours. She could have earned $20 an hour working for someone else. Her total explicit costs are $200. If each item she makes sells for $15, her economic profit equals what?

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Answers (1)

Know the Answer?

Amy Mercer · Answer 1

- $250

Explanation:

The economic profit calculation is presented below:

= Total revenues - explicit cost - implicit cost

where,

Total revenues = Explicit revenue * implicit revenue

= $15 * 50 items

= $750

Explicit cost = $200

Implicit cost = $20 * 40 hours = $800

Now place these values in the formula above

So the value would be equal to

= $750 - $200 - $800

= - $250