Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid S90,000 în rent for the dental office, S60,000 for his office manager's salary, $24,000 for the dental hygienist, S150,000 for insurance, and S6,000 for other miscellaneous costs. The normal profit from running his business is $20,000 A) His accounting profit is $350,000 B) His economic profit is S150,000. C) His economic profit is zero. D) His accounting profit is zero.

Question

Anaya Stephens

Business

5 August, 20:23

Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid S90,000 în rent for the dental office, S60,000 for his office manager's salary, $24,000 for the dental hygienist, S150,000 for insurance, and S6,000 for other miscellaneous costs. The normal profit from running his business is $20,000 A) His accounting profit is $350,000 B) His economic profit is S150,000. C) His economic profit is zero. D) His accounting profit is zero.

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Answers (1)

Know the Answer?

Brett Casey · Answer 1

The correct options are:

A) His explicit costs are $330,000.

B) His implicit costs are $170,000.

C) Only answers A and C are correct.

D) Answers A, B, and C are correct

E) His economic profit is zero

Answer

A) His explicit costs are $330,000.

Explanation:

Explicit cost refers to the costs attributed to the business. They are: $90,000,+$60000+$24000+$150000+$6000 = $330000

Implicit cost refers to opportunity cost of $150,000.

Hence, other options are wrong, only option A is correct.