Economic profits equal

Question

Quizplus · Accepted Answer

Economic profits are equal to total revenue minus the opportunity costs of all factors of production. This includes both explicit costs (such as wages and rent) and implicit costs (such as the forgone income from the owner's own labor). Accounting profits only take into account explicit costs, whereas economic profits consider all costs associated with producing a good or service. Therefore, economic profits will generally be lower than accounting profits, as they incorporate the opportunity costs of resources used in production.

Economic Profits Equal