Economic cost differs from accounting cost in that:
A)the former includes implicit costs, while the latter does not.
B)the latter counts true depreciation, while the former uses arbitrary rules.
C)the former is used to calculate both economic and accounting profit.
D)the latter includes depreciation, while the former does not.

Question

Quizplus · Accepted Answer

Economic cost includes both explicit costs (such as wages, rent, and materials) and implicit costs (such as opportunity costs of using resources for one purpose instead of another). Accounting cost only takes into account explicit costs and ignores implicit costs.

Economic Cost Differs from Accounting Cost in That