Suppose you run a business making pizzas. Over a year, you pay $18,000 for the ingredients, equipment, etc. that you need to make the pizzas, and your total revenue from selling pizza is $60,000. Had you not ran the pizza business, you could have instead worked at a job that would have paid you $40,000 for the year. What was your economic profit for the year?

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To calculate economic profit we need to take into account both explicit costs suc... View the full answer