00:01
Hello guys, we need to know these before we start our exercise together, like what does accounting profit equation.
00:07
It equals to total revenue minus explicit cost.
00:11
Okay, let's remember what does explicit cost.
00:14
They have a monetary value and they are easily identified on a bookkeeper's ledger, such as what? as you remember, such as production costs, least costs, marketing, budgets, payrolls, and so whatever.
00:27
Now let's move to differentiate between it and between the economic profit.
00:32
It's the total revenue minus the explicit cost minus the implicit cost.
00:37
So what is the implicit cost? it's the opportunity cost equal to what a firm must give up in order to use a factor of production for which it already owns and thus does not pay rent.
00:49
It is the opposite of an explicit cost which is born directly.
00:54
Okay, let's solve the exercise together.
00:59
The question says sales revenue equal 1 million labor, 600, capital, 150 and materials...