Illustrate what are the explicit-implicit and total economy

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Reference no: EM1363104

During a year of operation, a firm collects $175,000 in revenue and spends $80,000 on raw materials, labor, utilities, and rent. The owners of the firm have provided $500,000 of their own money to the firm instead of investing the money and earning a 14% rate of return.

a. What are the explicit, implicit, and total economic costs of the firm?

b. How much economic profit does the firm earn?

c. What is the firm's accounting profit?

d. If the owners could earn 20% annually on the money they have invested in the firm, what would the economic profit of the firm assuming revenue of $175,000?

Reference no: EM1363104

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