A firm calculates its total revenue to be $500,000 while incurring explicit costs of $300,000 and implicit costs of $250,000. What is the economic profit of the firm?

To find the economic profit of a firm, we need to consider both explicit and implicit costs. Explicit costs are the direct expenses, which in this case amount to $300,000. Implicit costs represent the opportunity costs, or the value of what the firm could have earned if it used its resources differently, totaling $250,000. We first add the explicit and implicit costs together, which gives us $550,000 in total costs. Then, we subtract these total costs from the total revenue of $500,000, leading to an economic profit of negative $50,000.