A local coffee shop has total revenues of $200,000 in a year. It has explicit costs of $150,000 (including rent, salaries, and supplies) and implicit costs (including the owner's foregone salary of $50,000) associated with running the business. How should the owner interpret the economic profit of the coffee shop in relation to their business decisions?

To understand the economic profit of the coffee shop, we first need to calculate it by considering both explicit and implicit costs. The total revenue is $200,000, and the explicit costs are $150,000. The implicit costs, which include the owner's lost salary of $50,000, add another layer of expenses, making the total costs $200,000 when combined. This means the economic profit is $0, which indicates that the coffee shop is covering all its costs but not generating extra profit beyond that. For the owner, this suggests that while the business is sustainable, they might need to rethink their strategies to either reduce costs or increase revenues to make the business more profitable and worthwhile compared to other opportunities.