Answer:
The correct option is b) $30,000
Explanation:
Formula that we can use to take out the economic profit is =
ECONOMIC PROFIT =
REVENUE - EXPLICIT COST - IMPLICIT COST
In the given question the revenue is equal to $250,000
Explicit cost is the actual cost that business has incurred, that too is given in the question which is equal to $160,000
Implicit cost is the cost which Joan has sacrificed ( opportunity cost) which is $100,000 which she invested in business and instead she could have earned 10% interest on this as, 10% x $100,000 = $10,000
and the salary which she has left of $50,000 will also be included in the implicit cost, so the total implicit cost would be $60,000
ECONOMIC PROFIT =
$250,000 - $160,000 - $60,000
= $30,000
