Suppose that a business incurred implicit costs of $500,000

Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting:

A. profits were $100,000 and its economic profits were zero.

B. losses were $500,000 and its economic losses were zero.

C. profits were $500,000 and its economic profits were $1 million.

D. profits were zero and its economic losses were $500,000.

Total revenue was 100,000 * $50 = $5,000,000 and explicit costs were also $5,000,000. So the firm lost its implicit costs for an economic loss of $500,000.


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