Calculates the book profit or loss as well as the economic gain or loss in each of the following situations: A company with total revenue of $145 million, explicit costs of $110 million, and implied costs of $15 million
Calculates the book profit or loss as well as the economic gain or loss in each of the following situations:
A company with total revenue of $145 million, explicit costs of $110 million, and implied costs of $15 million
Answer -
Need to find -
Accounting profit & economic profit
Given in the question -
Revenue = $145 million
Explicit cost = $110 million
implied cost = $15 million
Accounting profit (Book profit) = It is the profit which a firm would gain from after paying off the explicit cost ( fixed cost (rent), variable cost (cost of raw material)) .
Economic profit = It is the profit which firm would gain after paying explicit cost ( fixed cost (rent), variable cost (cost of raw material)) as well as compensate the implicit cost ( opportunity cost )
Step by step
Solved in 3 steps
