asked 141k views
1 vote
Suppose Louis Corporation could increase its profits considerably if it decided to shift from the clothing industry to the IT industry. In this​ case, the economic profits of Louis Corporation in the clothing industry are ______

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User Atiyar
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1 Answer

5 votes

Answer: probably positive

Step-by-step explanation: In simple words, economic profits refers to the amount of revenue that an entity is left with after deducting for the implicit and explicit cost.

Explicit cost refers to the direct payments made to others while implicit cost refers to the cost of loosing profit of best foregone alternative.

Therefore, in the given case if the company chooses to go for IT sector then it will loose its profits from clothing industry.

Hence the opportunity cost could be more than the revneu from changing the sector.

answered
User Mcmillab
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7.3k points
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