Economic profit is calculated as total revenue minus total ____, which includes both explicit and implicit costs.

Economic profit is calculated by taking total revenue and subtracting total costs, which include both explicit and implicit costs. Explicit costs are the direct, out-of-pocket expenses a business pays, like wages and rent. Implicit costs represent the opportunity costs of using resources for one purpose instead of the next best alternative, such as the income a business owner could have earned by working elsewhere. For example, if a bakery makes $100,000 in revenue, pays $60,000 in explicit costs, and has $30,000 in implicit costs, the economic profit would be $10,000, which shows how well the bakery is doing beyond just covering its expenses. This measure helps businesses understand not just their financial performance but also the value of their resources and decisions.