When there are implicit costs of production,
A)accounting and economic profit are equal
B)opportunity costs of production are zero
C)explicit costs of production are small
D)accounting profit will exceed economic profit
E)economic profit will exceed accounting profit

Question

Quizplus · Accepted Answer

Implicit costs are the opportunity costs of resources that are owned by the firm and not purchased in the market. They are not recorded in accounting records, but they are included in economic profit. Therefore, accounting profit will be higher than economic profit as the former does not consider implicit costs.

When There Are Implicit Costs of Production