Enter the average revenue, average cost, and total quantity into the calculator. The calculator will determine the total economic profit of the good or service.
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Economic Profit Formula
The following equation can be used to calculate the total economic profit earned from a good or service.
EP = (R – C) * Q
- Where EP is the economic profit
- R is the average revenue
- C is the average cost
- Q is the total quantity sold
To calculate the economic profit, subtract the average cost from the average revenue, then multiply by the total quantity.
Economic Profit Definition
Economic profit is the difference between the revenue from the sale of a good or service and the associated costs. Those associated costs include things like opportunity costs.
Economic Profit Example
How to calculate economic profit?
- First, determine the average revenue.
Calculate the total average revenue per unit.
- Next, determine the average cost.
Calculate the average cost per unit.
- Next, determine the total quantity sold.
Calculate the total quantity of goods sold.
- Finally, calculate the economic profit.
Calculate the economic profit using the formula above.
FAQ
Economic profit is a measure of the difference between economic revenue and economic costs.
