On a bar graph comparing a firm's economic profit with its accounting profit, it will always be TRUE that

Question

Quizplus · Accepted Answer

Economic profit takes into account both explicit costs (which are also included in accounting profit) and implicit/opportunity costs. Therefore, the column representing economic profit will always have a lower profit than the column representing accounting profit, as the former subtracts out the opportunity costs. This means that the opportunity costs will be missing from the column depicting accounting profit, making choice D the correct answer.

On a Bar Graph Comparing a Firm's Economic Profit with Its