Answer:
Jennifer earned an accounting profit of $1,000 and economic loss of $26,000
Explanation:
Total revenue for Jennifer is $39,000.
Explicit costs incurred is $38,000.
The implicit cost or opportunity cost involved is $27,000.
Accounting profit takes into account explicit costs only. It does not include implicit costs involved in the production process.
Jennifer has earned an accounting profit of
= Total revenue - Explicit costs
= $39,000 - $38,000
= $1,000
Economic profit takes into account the explicit cost as well as implicit cost.
The economic profit earned
= Total revenue - Total costs
= $39,000 - ($38,000 + $27,000)
= - $26,000
