If a firm has implicit costs as well as explicit costs

Question

Quizplus · Accepted Answer

Implicit costs are costs that do not involve a direct monetary payment, such as the opportunity cost of using the owner's time and resources in the business. Accounting profit only takes into account explicit costs, while economic profit takes into account both explicit and implicit costs. Therefore, if a firm has implicit costs in addition to explicit costs, its accounting profit might be higher than its economic profit because accounting profit only considers explicit costs.

If a Firm Has Implicit Costs as Well as Explicit