Which of the following statements is true?
A)A firm with accounting profits will also have economic profits.
B)A firm with economic losses will also have accounting losses.
C)A firm with economic profits will also have accounting profits.
D)A firm with accounting losses can also have economic profits.

Question

Quizplus · Accepted Answer

Economic profits take into account both explicit and implicit costs, including opportunity costs, whereas accounting profits consider only explicit costs. Therefore, if a firm has economic profits, it means it has covered both its explicit and implicit costs, implying it must also have accounting profits, which only cover explicit costs.

Which of the Following Statements Is True