Question

Chenelle runs a small business. Her monthly revenues are $15,000, and she has explicit costs of $10,000. Her opportunity cost of running the business is the $4,000 a month he could earn if she had a different job. Chenelle's accounting profit is and her economic profit is O $5,000: $1,000 $1,000; $5,000 O $5,000; -$1,000 O -$1,000:-$5,000

Answer 1

Accounting profit is the profit or loss that is calculated after deducting all operating expenses i.e. explicit cost from revenue.

ACCOUNTING PROFIT = TOTAL REVENUE - EXPLICIT COST

ACCOUNTING PROFIT = $15000-$10000=$5000

Economic profit is calculated after deducting explicit and implicit costs or opportunity cost.

ECONOMIC PROFIT = TOTAL REVENUE - EXPLICIT COST - OPPORTUNITY COST

ECONOMIC PROFIT = $15000- $10000 - $4000

ECONOMIC PROFIT = $1000

Chenelle runs a small business. Her monthly revenues are $15000 and she has explicit costs of $10000. Her opportunity cost of running the business is the $4000 a month he could earn if she had a different job. Chenelle's accounting profit is$5000 and her economic profit is $1000.

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