In 2018, Arctic Enterprises produced and sold 500 sleds in a competitive market at a price of $\$ 100$ each. The cost of materials and labor was $\$ 7,000$. The opportunity cost of capital was $\$ 10,000$ and the opportunity cost of the entrepreneur's time was $\$ 40,000$.

What is Arctic Enterprises' economic profit?

Choose 1 answer:
(A) $\$ 33,000$
(B) $\$ 3,000$
(C) $\$ 31,000$
(D) $-\$ 7,000$
(E) $\$ 43,000$

Question

In 2018, Arctic Enterprises produced and sold 500 sleds in a competitive market at a price of $\$ 100$ each. The cost of materials and labor was $\$ 7,000$. The opportunity cost of capital was $\$ 10,000$ and the opportunity cost of the entrepreneur's time was $\$ 40,000$.

What is Arctic Enterprises' economic profit?

Choose 1 answer:
(A) $\$ 33,000$
(B) $\$ 3,000$
(C) $\$ 31,000$
(D) $-\$ 7,000$
(E) $\$ 43,000$

Accepted Answer

***A*** ∻Key Concept∻ ⚹Economic Profit Calculation⚹ ∻Explanation∻ ⚹Economic profit is calculated as total revenue minus total costs, including both explicit and implicit costs. In this case, total revenue is $50,000 (500 sleds * $100 each), and total costs are $17,000 (explicit costs of $7,000 + opportunity costs of $10,000). Therefore, the economic profit is $33,000.⚹◊What is the formula for calculating economic profit in Microeconomics⍭ Generate me a similar question◊

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