Answer:
Economic profit = $300,000
Explanation:
<em>Economic profit is the difference between the sales revenue and the total of implicit cost and explicit cost</em>
Implicit cost are opportunity costs. For the farmer, these include
Interest on capital forfeited and salaries forfeited
= (22%× 1,000,000) + 40,000
= 260,000
Total cost = Implicit +explicit costs
= 260,000 + 260,000 +70,000 +120,000
Economic profit =750000- (260,000 +70,000 +120,000)
= $300,000
Note that the cost of land is not included because it a capital cost
