gital Resources for PrinciplexPrinciples of Microeconomics, x 1101/r/goto/cfi/1144 Profit (or loss) total revenue-total cost To calculate total revenue, we look at the dollar amount that the business earns over a specific period. For instance, suppose that in a given day McDonald’s sells 1,000 hamburgers for $1.00 each, 500 orders of large fries for $2.00 each, and 100 shakes for $2.50 each. The total revenue is the sum of all of these values, or $2.250. The profit is therefore $2,250 (total revenue) minus the total cost evenue: we don’t simply Calculating costs, however, is a little more complicated than ca tally the cost of making each b t, order of large fries, and hake. Total cost has two Explicit Gain: Resting on the Sabbath Another amazing experience of pain without gain was when Israel was in the wilderness and God said to them This is what the Lord has commanded Tomorrow is a day of solemn rest, a holy Sabbath to the Lord; bake what you will bake and boil what you will boil, and all that is left over lay aside to be kept till the morning. So they laid it aside till the morning, as Moses commanded them, and it did not stink, and there were no worms in it. Moses said Eat it today, for today is a Sabbath to the Lord; today you will not find it in the field. Six days you shall gather it but on the seventh day, which is a Sabbath, there will be none On the seventh day some of the people went out to gather, but they found none.Exodus 1623-27, ESV) million dollars. That money could have earned interest in a bank, been used to open a different business, or been invested in the stock market. Each alternative is an implicit cost Implicit costs are hard to calculate and easy to miss For example, it is difficult to determine ho much an investor could have earned from an alternative activity. Is the opportunity cost the 3% interest he might have earned by placing the money in a bank, the 10% he might have hoped to earn in the stock market, or the 15% he might have gained by investing in a different business? we can be sure that there is an opportunity cost for owner-peovided capial, but we can never know exactly how much that might be In addition to the opportunity cost of capital, implicit costs include the opportunity cost of the owner’s labor. Often, do not pay t a direct salary.1 3 5 6 9 K.