Joe quits his job as an insurance agent and opens his own sporting goods store. If his profits as measured by his accountant are greater than zero, then
A) his economic profit must be greater than zero.
B) his opportunity costs must be zero.
C) he made a good move because he is earning above normal profits.
D) There is not enough information to determine his economic profit, if any.

Question

Quizplus · Accepted Answer

Economic profit differs from accounting profit as it considers both explicit and implicit costs, including opportunity costs such as the income Joe gave up by leaving his job as an insurance agent. Without information on these costs, we cannot determine his economic profit.

Joe Quits His Job as an Insurance Agent and Opens