If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm's economic profits equal?

Name: If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm's economic profits equal?
Brand: Quizplus
Rating: 4.7 (56 reviews)

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting the opportunity cost from accounting profit. Here, 20% (accounting profit) - 8% (opportunity cost) = 12% of output.

If Accounting Profits for a Firm Are 20% of Output