Final answer:
Accounting profit only accounts for explicit costs and not the implicit costs such as the salary you would forego from a current job. In this scenario, with an accounting profit of $115,000 and foregoing a current salary of $125,000, the economic profit would be negative, considering opportunity costs.
Step-by-step explanation:
If you were to open your own business and earn an accounting profit of $115,000, this figure would represent your total revenues minus only the explicit costs associated with running the business. However, one must also consider the implicit costs, such as the opportunity cost of quitting your current job. In this scenario, if you were making a salary of $125,000 annually at your current job, opening your own practice would mean foregoing this salary, making it an implicit cost of starting the new business.
Therefore, while the accounting profit might be $115,000, one must subtract the implicit cost ($125,000) from this value to calculate the economic profit, which would actually show a loss in this scenario. This demonstrates the importance of considering both explicit and implicit costs when evaluating the profitability of a new venture.