Answer:
B) Arlene's total revenue is $2,500
Explanation:
As per given data
Revenue = 250 x $10 = $2,500
Expenses = ( 250 x $3 ) + $85 = $835
Economic Profit is calculated by deducting the opportunity cost and monetary costs from the revenue. Whereas Accounting Profit can be calculated by deducting the only monetary costs from the revenue.
Opportunity costs are all those losses which are faced for choosing an alternative like loss of interest income in case of investment in the business.
In Economic term opportunity costs is known as implicit cost and monetary cost as explicit cost. Formula are
Economic profit = Revenue - Implicit cost - Explicit Expenses
Placing values in the formula
Economic profit = $2,500 - $835 - $500 = $1,165
Accounting profit = Revenue - Explicit cost
Placing values in the formula
Accounting profit = $2,500 - $835 = $1,665
