Economic and Accounting Profits

Economics
Tutor: None Selected Time limit: 1 Day

What is the difference between economic and accounting profits?  Provide Examples

Aug 12th, 2014

Economic Profit = Revenue - (explicit costs+implicit costs)

                       = Revenue -(opportunity costs)

Accounting Profit = Revenue -explicit costs.

For example let revenue be $1,000,000

Explicit costs = 800,000

Had the company rented its unused premises , the implicit costs = 100,000

Accounting profit =1,000,000-800,000 =200,000

Economic Profit =1,000,000-800,000-100,000=100,000

Aug 12th, 2014

Studypool's Notebank makes it easy to buy and sell old notes, study guides, reviews, etc.
Click to visit
The Notebank
...
Aug 12th, 2014
...
Aug 12th, 2014
Dec 4th, 2016
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer