Answer:
Total explicit cost = $39,000
Implicit cost = $40,420
Accounting profit = $108,600
Economic profit = $68,180
Explanation:
Total explicit costs will be the total amount spent.
Therefore explicit costs =
Rent + office supplies + office staff + telephone expenses
Explicit costs = 10000 + 1000 + 24000 + 4000 = $39,000
Implicit costs= 40000 + (6000 * 0.07) =$40,420
Accounting profit = Total revenue - Total explicit costs
Accounting profit = $147,600 - $39,000 = $108,000
Economic profit = Total revenue - Total opportunity cost.
(Where total opportunity cost= explicit cost + implicit cost)
Therefore economic profits =
$147,600 - ($39,000+$40,420)
= $68,180.
Therefore,
Total explicit cost = $39,000
Implicit cost = $40,420
Accounting profit = $108,600
Economic profit = $68,180
