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Answer :
The anticipated economic profit from opening the flower shop would be $60,000.
To calculate the economic profit:
Economic profit is a measure of profitability that considers both explicit costs (such as rent and expenses) and opportunity costs (the value of using sub optimal alternative resources).
It is calculated by subtracting all costs, including opportunity costs, from total sales. Economic profit indicates whether the firm is making more money than the costs incurred given the value of lost alternative opportunities.
The explicit costs (rent and other expenses) and the opportunity cost (the salary you would earn working for the firm) from the revenue is subtracted:
Economic Profit = Revenue - Explicit Costs - Opportunity Cost
Economic Profit = $100,000 - ($30,000 + $10,000) - $70,000
Economic Profit = $100,000 - $40,000 - $70,000
Economic Profit = $60,000
The positive economic profit indicates that the flower shop is expected to generate income beyond the costs incurred.
To learn more about Economic Profit:
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