Respuesta :
Under these circumstances, the annual interest rate is 6 percent, and Kieran's accounting profit from his bike shop is $60,000. Kieran’s economic profit is $4000.
Total potential cost is equal to wage plus interest not paid, which comes to 50,000 + 6% of 100,000, or 50,000 + 6000, or 56,000.
Total revenue received = 60,000
Consider the formula for economic profits: revenue - (implicit + explicit cost).
Furthermore, that Implicit Cost = Opportunity Cost = 56,000.
Implicit cost = 0 (from the question, revenue covered it)
Economic profit, thus, equals $60,00 - $56,000, or $4,000.
- The difference between the money made from selling an output and the price of all the inputs plus any opportunity costs is what is known as an economic profit or loss. Economic profit is determined by subtracting opportunity costs and explicit costs from earned income.
- Opportunity costs are a kind of implicit cost that management determines and that vary depending on various events and viewpoints.
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