Profit is the difference between
A)marginal revenue and marginal cost.
B)total revenue and variable cost.
C)total revenue and total explicit cost.
D)total revenue and total cost.

Question

Quizplus · Accepted Answer

Profit is defined as the difference between total revenue and total cost. Total cost includes both explicit (out-of-pocket) and implicit (opportunity) costs. Therefore, option D - total revenue and total cost is the correct answer. Option A is incorrect because it only factors in the change in revenue and cost for one additional unit produced. Option B is incorrect because it only considers the variable costs and not the fixed costs which are also a part of the total cost. Option C only factors in the explicit costs and not the implicit costs.

Profit Is the Difference Between