Economic profit of a decision in question equals
A)accounting profit of the decision in question + its opportunity cost.
B)accounting profit of the decision in question − accounting profit of the best available alternative.
C)accounting profit of the decision in question + its opportunity cost + overheads.
D)its opportunity cost + accounting profit of the best available alternative.

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting the accounting profit of the best available alternative (opportunity cost) from the accounting profit of the decision in question. This measures the true profitability of a decision by considering what is foregone by not choosing the next best alternative.

Economic Profit of a Decision in Question Equals