Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. in tom's first year in business his total revenue equaled $150,000. tom's explicit cost during the year totaled $85,000. what is tom’s economic profit for his first year in business?
a) $0
b) $85, 000
c) $20, 000
d) $65, 000

Given:

Implicit Cost = $65,000

Total revenue = $150,000

Explicit cost =  $85,000

Here, we'll compute the economic profit for the first year as :

Economic profit = Total revenue - (Explicit cost + Implicit Cost)

Economic profit = $150,000 - ($85,000 + $65,000)

Economic profit = $0

∴ Tom’s economic profit for his first year in business will be $0

The correct option is (a).

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answer(b) revenue account which increases;