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Accounting vs Economic Profit Accounting profit= Total revenue – Explicit cost Economic profit = Total revenue- Economic cost Economic cost= Explicit cost+ Implicit cost Accounting vs Economic Profit Jaynet spends $30,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm---one offer was for $110,000 per year, and the other was for $80,000. However, she turned both jobs down to continue a painting career. If Jaynet sells 25 paintings per year at a price of $8,000 each: a) What are her accounting profits? b) What are her economic profits? Example a. Total Revenue =P*Q=$8,000*25=$200, 000 Explicit cost=$30,000 Accounting profit=$200,000-$30,000=$170,000 b. Implicit cost=Opportunity Cost=$110,000 Economic profit =$200,000-($30,000+$110,000) =$200,000-$140,000 =$60,000