Answer (B) is correct. Implicit costs are amounts that would have been received if self-owned resources had been used outside the firm’s business. Economic profit is pure profit, or the excess of revenue over both explicit and implicit costs. Revenues of $2 million minus explicit costs of $700,000 result in accounting income of $1.3 million. That amount is reduced by the $200,000 of implicit costs to arrive at economic profit of $1.1 million.