Question

Shelley’s Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's a. explicit costs were $9 million. b. total revenue was $9 million. c. accounting profit was $9 million. d. economic profit was $9 million.

Answer 1

Answer: Option B

Explanation:

A. Explicit cost are the cost paid to others in return of their service. Hence Option A is incorrect.

B. Revenue is the total amount of earnings a company have before deducting for expenses. Hence Option B is correct.

C. Accounting profit means (Revenue - explicit cost) . Hence Option C is incorrect.

D. Economic profit means (Revenue - explicit cost - implicit cost) . Hence Option  D is incorrect.