Economic profit is the difference between total revenue and
A) the normal profit.
B) interest costs of production.
C) opportunity costs of production.
D) the costs of resources bought in markets.

Question

Quizplus · Accepted Answer

Economic profit represents the revenue earned by a firm minus all of the opportunity costs of production, such as implicit costs and foregone alternative uses of resources. It goes beyond accounting profit, which only subtracts explicit costs from revenue. Therefore, economic profit does not include normal profit (which is the minimum profit necessary to keep the firm in business and compensate the entrepreneur for their time and risk-taking) or interest costs of production (which are a type of explicit cost). Economic profit also accounts for the costs of resources bought in markets, but it goes beyond that by including the value of resources that the firm already possesses, such as the owner's own skills and knowledge.

Economic Profit Is the Difference Between Total Revenue and