Implicit costs of production


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

A. $500,000 and an economic profit of $200,000

B. $400,000 and an economic profit of $200,000

C. $300,000 and an economic profit of $400,000

D. $200,000 and an economic profit of $500,000

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Macroeconomics: Implicit costs of production
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