During a year of operation, a firm collects $175,000 in revenue and spends $80,000 on raw materials, labor expense, utilities, and rent. The owners of the firm have provided $500,000 of their own money to the firm instead of investing the money and earning a 14 percent annual rate of return.
a. The explicit costs of the firm are $______________. The implicit costs are $ ______________. Total economic cost is $ ______________.
b. The firm earns economic profit of $ ______________.
c. The firm’s accounting profit is $ ______________.
d. If the owners could earn 20 percent annually on the money they have invested in the firm, the economic profit of the firm would be ______________.