Asked by Brittany McCord on Jun 28, 2024
Verified
A firm's economic profit is usually higher than its accounting profit.
Economic Profit
The surplus remaining after deducting both explicit and implicit costs from total revenues, emphasizing a firm's financial performance beyond just its accounting profit.
Accounting Profit
Accounting profit is the monetary gain calculated by subtracting total explicit costs from total revenue.
- Recognize the significance of opportunity cost in the process of economic decision-making.
Verified Answer
NB
Niruta BhandariJul 03, 2024
Final Answer :
False
Explanation :
Economic profit takes into account both explicit and implicit costs, including opportunity costs, while accounting profit only considers explicit costs. Therefore, economic profit is usually lower than accounting profit.
Learning Objectives
- Recognize the significance of opportunity cost in the process of economic decision-making.
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