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Chester Atkinson
on Oct 08, 2024

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Accounting profits are typically:

A) greater than economic profits because the former do not take explicit costs into account.
B) equal to economic profits because accounting costs include all opportunity costs.
C) smaller than economic profits because the former do not take implicit costs into account.
D) greater than economic profits because the former do not take implicit costs into account.

Implicit Costs

The opportunity costs involved in using resources that a firm already owns, for which it does not make a direct payment.

Accounting Profits

The total revenue of a business minus the explicit costs associated with producing goods or services, not accounting for implicit costs.

Economic Profits

The variance between a company's overall earnings and the sum of its explicit and implicit expenditures.

  • Undertake calculations to distinguish between accounting profit and economic profit.
  • Discern the connection among economic profit, accounting profit, and normal profit.
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Kinzie MedlinOct 09, 2024
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