Which of the following statements about economic profits is not correct?

A) Economic profits act as a signal to producers who make decisions about how to allocate scarce resources.
B) Economic profits are influenced by the degree of monopoly power.
C) Economic profits represent a reward for risk taking.
D) Economic profits are an explicit cost of production.

Economic profits are not considered an explicit cost of production. Instead, they are the surplus remaining after all explicit and implicit costs, including opportunity costs, have been deducted from total revenues. Explicit costs are direct, out-of-pocket payments for wages, rent, materials, etc., while economic profits take into account both explicit and implicit costs, including the opportunity cost of capital.