1.During a year of operation, a firm collects $5,000,000 (TR) in revenue and spends $3,500,000 (EXPLICIT) on labor expense, raw materials, rent, and utilities. The firm’s owner has provided $1,000,000 of her own money instead of investing the money and earning a 12 percent annual rate of return. Show your work. a. The explicit costs of the firm are $_________. The implicit costs are $_________. Total economic cost is $__________. b. The firm earns accounting profit of $________.  The firm’s economic profit is $_________.

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A: Explicit Costs are those costs that are directly observed like the cost involved in hiring labor or…

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A: Explicit costs are clear, measurable expenses involving direct monetary transactions, such as rent…

Q: Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a…

A: Total revenue is the total receipts collected from the sale of goods or service in the market.…

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A: Explicit cost is the actual monetary expenditure to run the business. Implicit cost is the…

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A: The formula is: Accounting profit =total revenue - total explicit cost.

Q: 1. Costs and profit Van lives in Chicago and runs a business that sells boats. In an average year,…

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A: Total cost is equal to the total cost of producing the output. Total cost includes total fixed cost…

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Q: 1. Definition of economic costs Clancy lives in San Francisco and operates a small company selling…

A: Explicit Costs: Explicit costs are tangible, out-of-pocket expenses incurred by a business that…

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?