Asked by Jonah Marukot on Jul 28, 2024
Verified
Economic profit is greater than or equal to accounting profit.
Economic Profit
The difference between total revenues and total costs, including both explicit and implicit costs, measuring the true profitability of an enterprise.
Accounting Profit
The difference between a firm's total revenue and its explicit costs, often reported in the financial statements.
- Understand the distinction between economic and accounting profits by acknowledging the involvement of implicit costs.
Verified Answer
DA
Dumilde AssuncaoAug 01, 2024
Final Answer :
False
Explanation :
Economic profit takes into account both explicit costs (which are considered in accounting profit) and implicit costs (opportunity costs of all resources), making it generally less than or equal to accounting profit.
Learning Objectives
- Understand the distinction between economic and accounting profits by acknowledging the involvement of implicit costs.
Related questions
Although Economists and Accountants Treat Many Costs Differently, They Both ...
When Economists Speak of a Firm's Costs, They Are Usually ...
Economists and Accountants Both Include Forgone Income as a Cost ...
The Difference Between Economic Profit and Accounting Profit Is That ...
Consider a Small Family Wheat Farm ...