Can accounting profit be positive while economic profits are negative?
A) No. The two concepts are identical.
B) Yes, if total revenue covers opportunity costs but not explicit costs.
C) Yes, if total revenue covers explicit costs but not opportunity costs.
D) No. Economic profits must always be larger than accounting profits.

Question

Quizplus · Accepted Answer

Accounting profit can be positive if total revenue covers explicit costs, but economic profit can be negative if opportunity costs are not covered. Economic profit considers both explicit and implicit (opportunity) costs.

Can Accounting Profit Be Positive While Economic Profits Are Negative