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navik [9.2K]
3 years ago
10

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sol

d 4,000 units of its output at $300 per unit, its accounting profits were:
a. $100,000 and its economic profits were zero.
b. $200,000 and its economic profits were zero.
c. $100,000 and its economic profits were $100,000.
d. zero and its economic loss was $200,000.
Social Studies
1 answer:
Arturiano [62]3 years ago
4 0

Answer:b

Explanation:

Given

Implicit cost=$ 200,000

Explicit cost=$ 1 million

4000 units

Output=$ 300 per unit

therefore revenue =4000\times 300=$ 12\times 10^5

as we need to compute accounting profit therefore we do not consider the implicit cost

accounting Profit=1.2-1=$ 0.2 million

and economic Profit =Revenue -explicit cost-Implicit cost

economic Profit=0.2-0.2=0

Thus option b is most appropriate  

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