Calculate the economic profit for a firm if its total revenues are Rs. 35 crores, explicit costs are Rs. 7 crores, and implicit costs are Rs. 10 crores.
- ARs. 32 crores
- BRs. 52 crores
- CRs. 18 crores
- DRs. 38 crores
Solution & Step-by-step Explanation
Economic profit is calculated by subtracting both explicit costs and implicit costs from the total revenue:
Economic Profit=Total Revenue−(Explicit Costs+Implicit Costs)
Given:
Total Revenue=Rs. 35 crores
Explicit Costs=Rs. 7 crores
Implicit Costs=Rs. 10 crores
Economic Profit=35−(7+10)=35−17=18 crores
Hence, the economic profit is Rs. 18 crores.
Economic Profit=Total Revenue−(Explicit Costs+Implicit Costs)
Given:
Total Revenue=Rs. 35 crores
Explicit Costs=Rs. 7 crores
Implicit Costs=Rs. 10 crores
Economic Profit=35−(7+10)=35−17=18 crores
Hence, the economic profit is Rs. 18 crores.