Accounting profits are calculated as:

Name: Accounting profits are calculated as:
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Question

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Accounting profits only take into account explicit costs which are the actual expenses paid out to run a business such as wages, rent, and utilities. Therefore, accounting profits are calculated as total revenue minus explicit costs. Option B considers both explicit and implicit costs, and option C only considers implicit costs, which are the opportunity cost of the next best alternative foregone.

Accounting Profits Are Calculated As