A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. Furthermore, the firm's factory sits on land owned by the firm that could be rented out for $30,000 per year. Calculate this firm's accounting profit and economic profit. Make sure to specify what would be explicit costs and what would be implicit costs.

A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. Furthermore, the firm's factory sits on land owned by the firm that could be rented out for $30,000 per year. Calculate this firm's accounting profit and economic profit. Make sure to specify what would be explicit costs and what would be implicit costs.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 5E

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