In a given year, an advertising firm has the following costs: $510,000 in wages and salaries paid to employees; $70,000 in rental payments for office space; and $68,000 for office supplies, advertising, and utilities. In addition, Megan, the owner of the firm, works for the firm full time (and is not paid a salary, since she receives the firm's profits). If she did not work for the advertising firm, Megan could earn $110,000 per year working as an advertising agent for another firm. For each possible amount of total revenue, fill in the accounting profit and economic profit of the marketing firm. Total Revenue Accounting Profit Economic Profit ($) ($) ($)730,000 780,000 830,000 880,000

 Revenue                 accounting profit                 economic profit

$730,000                 $82,000                                  -$28,000

$780,000                 $132,000                                  $22,000

$830,000                 $182,000                                  $72,000

$880,000                 $232,000                                 $122,000

Explanation:

costs incurred = 510000+70000+68000 = $648,000 Accounting expenses

Economic expenses = 648000+110000= $758,000

The $110,000 salary is and opportunity cost and opportunity costs are a type of implicit cost.

Implicit costs are costs forgone of resources the owner and the company already owns.

ACCOUNTING PROFIT = Revenues - Accounting expenses

ECONOMIC PROFIT =Revenues - Economic expenses

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