Economic profit equals accounting profit when implicit costs are zero because economic profit is calculated by subtracting both explicit and implicit costs from total revenue, whereas accounting profit subtracts only explicit costs. If there are no implicit costs, the two profits are equal.

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Economic Profit

Question 92

Multiple Choice

Economic profit

A) never equals accounting profit.
B) equals accounting profit only when implicit costs equal explicit costs.
C) equals accounting profit only when explicit costs equal zero.
D) equals accounting profit only when implicit costs equal zero.

Correct Answer: