Suppose that a firm earned $500,000 in total revenue. At the same time, it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that cost $100,000. The economic profit earned by the firm equals:

Question

Leonidas Leach

Business

27 February, 08:30

Suppose that a firm earned $500,000 in total revenue. At the same time, it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that cost $100,000. The economic profit earned by the firm equals:

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Answers (1)

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Cordell Brewer · Answer 1

Answer: $50,000

Explanation:

Given the following;

Total Revenue = $500,000

Labor cost = $200,000

Economic Depreciation = $50,000

Normal profit = $75,000

Interest paid to bank = $25,000

Other cost of production = $100,000

Economic profit = (Total revenue - labor cost - economic Depreciation - normal profit - interest paid to bank - other production cost))

Economic profit = $ (500,000 - 200,000 - 50,000 - 75,000 - 25,000 - 100,000)

Economic profit = $50,000