Raheem is considering starting a new business selling handmade furniture. He estimates that his total revenue would be $50,000 per year. However, to start this business, he would have to quit his current job where he earns $40,000 annually. Additionally, he expects to incur explicit costs of $30,000 for materials and labor. Based on this information, what can Raheem conclude about his potential economic profit if he proceeds with the business?

To understand Raheem's potential economic profit, we first need to look at his total revenue and costs. He expects to earn $50,000 from his handmade furniture business. However, he will also lose his current job income of $40,000, which is an opportunity cost because he could have earned that money instead. After subtracting his explicit costs of $30,000 from his total revenue, Raheem would have $20,000 left. But when we factor in the lost income from his job, his economic profit would actually be a loss of $20,000, since he is not covering the income he gave up.