Economic profits will take into account:

Question

Quizplus · Accepted Answer

Economic profits take into account both implicit and explicit costs. Explicit costs are the out-of-pocket expenses incurred by a firm, such as wages, rent, and materials. Implicit costs are the opportunity costs of using resources that the firm already owns, such as foregone interest income from using cash to invest in the business instead of earning interest in a savings account. Economic profits subtract both explicit and implicit costs from total revenue to determine the profitability of a firm.

Economic Profits Will Take into Account