Which of the following definitions is correct?

Question

Quizplus · Accepted Answer

Economic profit is equal to accounting profit minus implicit costs. This is the correct definition, as economic profit takes into account the opportunity cost of resources used and not just the explicit costs recorded in accounting. Option A is incorrect because economic costs include both accounting costs and implicit costs, so adding them together would give total costs rather than profit. Option C is also incorrect as it suggests that accounting profits are greater than economic profits, whereas the opposite is usually true. Option D is incorrect as economic costs already include both explicit and implicit costs, so adding them together with other costs would result in double counting.

Which of the Following Definitions Is Correct