Opportunity cost is included in the definition of economic profit but not in the definition of accounting profit.

Question

Quizplus · Accepted Answer

Economic profit takes into account the opportunity cost of the next best alternative, whereas accounting profit only considers explicit costs such as wages, rent, and materials used in production. Economic profit takes into account both explicit (monetary) and implicit (opportunity) costs, whereas accounting profit only considers explicit costs.

Opportunity Cost Is Included in the Definition of Economic Profit