Answer:
(a) $60; $20 million
(b) $25; -$5 million
(c) $10; -$10 million
(d) -$25; -$75 million
Explanation:
(a)
Accounting Profit = Total revenues - Explicit cost
= $150 - $90
= $60 million
Economic Profit = Accounting Profit - Implicit cost
= $150 - $90 - $40
= $20 million
(b)
Accounting Profit = Total revenues - Explicit cost
= $125 - $100
= $25 million
Economic Profit = Accounting Profit - Implicit cost
= $125 - $100 - $30
= -$5 million (that's a negative $5 million)
(c)
Accounting Profit = Total revenues - Explicit cost
= $100 - $90
= $10 million
Economic Profit = Accounting Profit - Implicit cost
= $100 - $90 - $20
= -$10 million (negative $10 million)
(d)
Accounting Profit = Total revenues - Explicit cost
= $250 - $275
= -$25 million (negative $25 million)
Economic Profit = Accounting Profit - Implicit cost
= $250 - $275 - $50
= -$75 million (negative $75 million)
