Types of Profit- Micro Topic 3.4

Jacob Clifford explains the concepts of profit in microeconomics, using an example of Kevin's ice cream business. He distinguishes between explicit and implicit costs, and how they affect accounting and economic profit. The video emphasizes the importance of considering opportunity costs in decision-making and concludes with a pop quiz.

What are the fixed costs in Kevin's ice cream business?

• Cost of ingredients and cones

• Opportunity cost of other jobs

• Business license and cart

• Time spent selling ice cream

How is accounting profit calculated?

• Total revenue minus implicit costs

• Total revenue minus explicit costs

• Total revenue minus opportunity costs

• Total revenue minus both explicit and implicit costs

What is the economic profit if Kevin's total revenue is $1000 and his total costs, including implicit costs, are $1350?

• $1000 profit

• $0 profit

• $350 loss

• $150 profit

Why is it important to consider implicit costs in decision-making?

• They are easier to calculate than explicit costs

• They represent out-of-pocket expenses

• They are always higher than explicit costs

• They reflect the opportunity cost of decisions

What does it mean if a business has zero economic profit?

• The business is making a loss

• The business is covering both explicit and implicit costs

• The business is not covering its implicit costs

• The business is not covering its explicit costs