Economic profit for a firm:

Question

Quizplus · Accepted Answer

Economic profit takes into account all opportunity costs associated with the firm's activities, including both explicit (monetary) costs and implicit (non-monetary) costs such as the opportunity cost of the entrepreneur's time or the cost of forgoing other investment opportunities. It is calculated as revenue minus total cost, including both explicit and implicit costs. A normal or average return on the funds invested in the business is already accounted for in the calculation of total cost, so it is not included separately in the calculation of economic profit.

Economic Profit for a Firm