How do a company's accounting profit and economic profit compare in size?

Question

Quizplus · Accepted Answer

Accounting profit only takes into account explicit costs, while economic profit considers both explicit and implicit costs. If there are implicit costs, such as the opportunity cost of using resources in one way instead of another, economic profit will be lower than accounting profit. Therefore, accounting profit is usually larger than economic profit if there are implicit costs.

How Do a Company's Accounting Profit and Economic Profit Compare