Answer to Question #115416 in Microeconomics for Lu

Question

Suppose that a firm produces 200,000 units a year and sells them all for 10 dollar's each. The explicit costs of production are 1,500,000 dollar's and the implicit costs of production are 300,000 dollars . The firm has an accounting profit of

Answer 1

accounting profit $=$ Total revenue $-$ the explicit costs;

Total revenue $=$ $200000×\$10=\$ 2000000;$

accounting profit$=2000000-1500000=\$500000;$