Explain and calculate the firms economic profit

Reference no: EM133553815

For this question, explain every part of the question in writing and fully show/type the formulas used and your calculations. During a year of operation, a firm collects $500,000 in revenue and spends $225,000 on raw materials, labor expense, utilities, and rent. The owners of the firm have provided $100,000 of their own money to the firm instead of investing the money and earning a 6.5 percent annual rate of return. Treat income tax as an explicit cost of doing business. (22 points total) a. Explain and calculate the explicit costs of the firm (4 points) b. Explain and calculate the implicit costs (4 points) c. Explain and calculate the economic cost (4 points) d. Explain and calculate the firm's economic profit (4 points) e. Explain and calculate the firm's accounting profit (4 points) f. If the owners could earn 13 percent annually on the money they have invested in the firm, explain, and calculate the economic profit of the firm. (2 points)

Reference no: EM133553815

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