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A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The firm's economic profit is:

Respuesta :

Tundexi

Answer:

Zero

Explanation:

Economic profit is total revenue minus total opportunity cost (Explicit and implicit cost). In this problem, implicit cost is the 10% interest from investment of $100 million. Economic profit is $200 million minus explicit cost ($190 million + $10 million = $200 million) which equals zero.