Accounting costs and economic costs differ because

Question

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Accounting costs refer to the actual monetary expenses incurred in a business, such as wages, rent, and materials. Economic costs, on the other hand, include both external expenses and implicit costs, such as the opportunity cost of choosing one investment over another. Implicit costs do not involve any direct monetary expense, but rather represent the value of the next best alternative that is foregone. Therefore, economic costs are higher than accounting costs since they account for implicit costs, whereas accounting costs do not.

Accounting Costs and Economic Costs Differ Because