Answer:
Tom’s economic profit for his first year in business is $0.
Explanation:
Tom quit his $65,000 a year corporate lawyer job to open up his own law practice.
In Tom's first year in business his total revenue equaled $150,000.
Tom's explicit cost during the year totaled $85,000.
The economic profits include both implicit as well as explicit cost.
The implicit cost is the opportunity cost of quitting corporate job.
Economic profits
= Total Revenue - Total costs
= $150,000 - ($85,000 + $65,000)
= $0