A business owner makes 1000 items a day. Each day she spends 8 hours producing those items. If hired, elsewhere she could have earned $250 an hour. The item sells for $15 each. Production occurs seven days a week. If the explicit costs total $150,000 per month, what is her economic profit

Question

Business

Frye

13 March, 09:14

A business owner makes 1000 items a day. Each day she spends 8 hours producing those items. If hired, elsewhere she could have earned $250 an hour. The item sells for $15 each. Production occurs seven days a week. If the explicit costs total $150,000 per month, what is her economic profit

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Jamie Fernandez · Answer 1

Economic profit = $214,000

Explanation:

Giving the following information:

Business:

Units = 28,000 a month

Hours = 224 hours

Total cost = 150,000 a month

Selling price per unit = $15

Other work:

Income = $250 an hour

Economic profit includes the opportunity cost.

Economic profit = 28,000*15 - 150,000 - 250*224

Economic profit = $214,000