Income that is measured after deduction of the cost of capital is called:
A) operating income.
B) operating profit.
C) economic income.
D) economic profit.

Question

Quizplus · Accepted Answer

Economic profit is income that is measured after deduction of the cost of capital. It takes into account both explicit and implicit costs, such as the opportunity cost of capital. Operating income and operating profit do not take into account the cost of capital, while economic income is a broader concept that includes non-profit sources of income, such as government subsidies or donations.

Income That Is Measured After Deduction of the Cost of Capital