Economic profit is

Question

Economic profit is

Quizplus · Accepted Answer

Economic profit takes into account both explicit costs (such as rent, salaries, and materials) and implicit costs (such as opportunity costs of using resources for one purpose rather than another). It is calculated by subtracting total cost (explicit and implicit) from total revenue. Accounting profit only takes into account explicit costs and is calculated by subtracting only explicit costs from total revenue. Therefore, economic profit is not the same as accounting profit (option B) nor is it accounting profit plus implicit costs (option C) or accounting profit divided by implicit costs (option D).

Economic Profit Is