00:01
So here we're talking about some economic accounting, right? we are told the price is equal to five.
00:05
We're told the quantity is equal to 15 ,233.
00:09
Now, the two of these together give us the revenue, which is price times quantity, right? so if you multiply five by 15 ,233, right, you can determine the volume of sales in dollars, right? so if i do that, i find she had sales of 76 ,165.
00:27
That was the revenue for the business, right? we know the implicit cost is equal to 18 ,000.
00:39
And we know the explicit cost is equal to 33 ,000.
00:44
Now, the accounting profit, and this is the key thing, accounting profit, is equal to revenue minus explicit costs, right? it only accounts the actual explicit costs that are going out the door of the business.
01:06
So here, that is simply 76 ,165 minus the explicit costs of 33 ,000, and that would be equal to 43 ,165.
01:20
And that would be the accounting profit from this business.
01:24
The economic profit is a little bit different.
01:27
Economic profit is equal to the accounting profit minus the implicit costs, right? so economic profit goes further and also includes implicit costs, right? which is what we're going to.
01:50
And again, i know you say explain question number two, but just in case anyone else watches this video, we should do question number one as well, 43 ,165 minus the 18.
02:01
Thousand which is going to be 25 ,165...