Question

Belinda is the owner of a department store. Last year, her total revenue was $525,000 and her total labor costs were $200,000. Her overhead expenses, including insurance and legal fees, were $175,000. The rent on the building was $45,000. Belinda could earn $105,000 per year working at a nearby department store. If her total revenue increases to $600,000 this year and all of her other expenses are held constant, we know that her economic profit is now?

Answer 1

Answer:

$ 75 000

Explanation:

Economic profit = total revenue from sales - ( total expenses + opportunity cost) = $ 600000 - ( $ 200000 + $  175 000 + $ 45000 + $ 105000) = $ 75 000