Which of the following expressions is correct?


6. Which of the following expressions is correct? a. accounting profit cconomic profit+ implicit costs X b, accounting profit = total revenue-implicit costs c, economic profit = accounting profit explicit costs d. economic profit = total revenue-implicit costs 大
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Answer

6. The right answer is option A. Accounting Profit = economic profit + implicit costs Explanation: Accounting profit does not consider implicit or opportunity costs. It only considers explicit costs. Economic profit considers implicit costs as well as the explicit costs. Therefore, economic profit is calculated after deducing implicit costs from accounting profit. So, the relationship is as follows: Economic profit = Accounting profit – Implicit costs

So, Accounting profit = Economic profit + implicit costs.

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