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Economic Profit Is a Better Measure of a Firm's Performance

Question 34

Multiple Choice

Economic profit is a better measure of a firm's performance than accounting profit because


A) accounting profit is unreliable because generally accepted accounting practices (GAAP) overstates the firm's true costs of using resources.
B) economic profit fully accounts for all sources of revenue.
C) as a general rule,only explicit costs can be subtracted from revenue for the purposes of computing taxable profit.
D) the opportunity cost of using ALL resources is subtracted from total revenue.
E) both c and d

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