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

choose the correct answer:

Multiple Choice

• profits were $100 000 and economic profits were zero
• profits were zero and its economic profits were $500 000
• losses were $500 000 and its economic losses were zero
• profits were zero and its economic losses were $500 000
• profits were $500 000 and its economic profits were $1 million