Economic profit is always positive when
A)accounting profit is positive.
B)accounting profit is zero.
C)accounting profit is greater than the firm's opportunity costs.
D)accounting profit is less than the firm's opportunity costs.

Question

Quizplus · Accepted Answer

Economic profit is calculated by subtracting both explicit and implicit costs from total revenue. If accounting profit is positive, it means that the firm is earning more revenue than explicit costs. However, if the firm's implicit costs (such as opportunity costs) are greater than zero, then economic profit could be negative. Therefore, economic profit is always positive only when accounting profit is greater than the firm's opportunity costs.

Economic Profit Is Always Positive When