The larger the implicit costs of a business:

Question

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Implicit costs are the opportunity costs of using resources for a specific purpose, such as the foregone opportunity to earn income somewhere else. When implicit costs are higher, economic profit will be smaller because a larger portion of revenue is going toward covering these opportunity costs. Accounting profit, on the other hand, only takes explicit costs into account and does not include opportunity costs. Therefore, the larger the implicit costs, the smaller the economic profit will be.

The Larger the Implicit Costs of a Business