Suppose that a tour bus business incurred implicit costs of $600,000 and explicit costs of $7 million in a specific year. If the firm sold 125,000 tours at $60 per person, its accounting:

A) profits were $100,000 and its economic profits were $500,000.
B) losses were $100,000 and its economic losses were $700,000.
C) profits were $500,000 and its economic losses were $100,000..
D) profits were zero and its economic losses were $500,000

To determine the accounting and economic profits, we need to consider the total revenue, explicit costs, and implicit costs.

Total revenue = 125,000 tours * $60 per person = $7,500,000

Explicit costs = $7,000,000

Implicit costs = $600,000

Accounting profit = Total revenue - Explicit costs = $7,500,000 - $7,000,000 = $500,000

Economic profit = Accounting profit - Implicit costs = $500,000 - $600,000 = -$100,000

Now, let's check the given options:

A) Profits were $100,000 and its economic profits were $500,000.
Based on the calculations, the accounting profit is $500,000, not $100,000. So option A is incorrect.

B) Losses were $100,000 and its economic losses were $700,000.
The accounting profit is positive, so it's not a loss. Also, the economic profit is -$100,000, not -$700,000. So option B is incorrect.

C) Profits were $500,000 and its economic losses were $100,000.
The accounting profit is $500,000, which matches this option. However, the economic profit is -$100,000, not a loss. So option C is incorrect.

D) Profits were zero and its economic losses were $500,000.
The accounting profit is $500,000, not zero. Also, the economic profit is -$100,000, not -$500,000. So option D is incorrect.

None of the given options are correct. The correct answer would be "None of the above." The accounting profits were $500,000, and the economic profits were -$100,000.