What would the Business Economic Profit be?

Posted on 2014-12-24 05:32:00 in Economics by TONELLA

Joe is sells tractors from his garage. He pays himself $1000 that he would have made working the hours that he uses making tractors. If he didn't sell from his garage he would rent his garage for $400 to his neighbor. In total, Joe makes $2000 a week while his total costs are $700.

How much is his total business economic profit?

I know business economic profit is total revenue mins implicit and explicit costs, but what throws me off is the part where is says he pays himself the $1000 that he would have made earning wages. I originally thought the answer would then be 2000 - ($700 + $400) which would equal $900, but it was not one of the answers on the exam. Can someone help explain this to me? Thanks!

---

Answer Comment

No Answers Posted Yet.