A firm had sales revenue of 872 million last year It spent 4

A firm had sales revenue of $872 million last year It spent $482 million on labor $92 million on capital and $170 million on materials. The firm\'s factory sits on land owned by the firm that could be rented out for $4 million per year. What was the firm\'s economic profnt last year in millioris of dollars? (Do not include the word \"million or the dollar symbol in your answer. just a number.)

Solution

Economic profit = Revenue – explicit cost – implicit cost

Economic profit = 872 – (labor cost + capital cost + material cost) – (Foregone rent from the land)

Economic profit = 872 – (482 + 92 + 170) - 4

Economic profit = 124