Answer:
$350,000
Explanation:
The economic is the profit that also takes into account the opportunity costs, which are the savings and earning that could be made by opting the next best alternative. In this case the opportunity costs are the savings the farmer would earn on $1,000,000 @ 2% and the amount he can make as a shoe salesman.
Economic profit = Revenue - Costs - Opportunity costs
Assuming 150,000 baskets of peaches @ $4.00 each
Opportunity cost of savings = 1,000,000*0.02 = $20,000
Opportunity cost of shoe salesman = $40,000
Economic profit = (150,000*4) - (60,000 + 130,000) - (20,000 + 40,000)
Economic profit = $350,000
Hope that helps.
