Description
Week 3 Discussion ECO 100
Economic Profit vs. Accounting Profit"
In this video, Sal from Khan Academy explains how the economic concept of cost is different from accounting cost and why the difference is important to understanding what we mean by profit. In economics, we build opportunity cost — including 'implicit costs' — right into the supply curve.
After you view the video, think of the business you are currently in, or even dream about the business you would like to start. Identify/discuss the fixed costs, variable costs, and the implicit costs in that business.
Explanation & Answer
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Implicit Cost, Variable Costs, and Explicit Costs
According to the payments made to a company, costs are classified into three categories;
explicit Costs, variable costs as well as implicit costs. Explicit costs include the cost which is
incurred by a business organization during a production. Implicit costs on the other charges
include costs that are incurred by a company, but they are not necessarily reported or shown as a
separate expense
Implicit cost
Implicit cost refers to any value which occurs but is not shown or even reported on a
separate payment. This...
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