Economic profits are calculated by subtracting

A) explicit costs from total revenue.
B) implicit costs from total revenue.
C) implicit costs from normal profits.
D) explicit and implicit costs from total revenue.

Economic Profits

The surplus generated from business activities after accounting for both explicit and implicit costs, including opportunity costs, representing above-normal returns.

Explicit Costs

Direct, out-of-pocket payments for costs of production, such as wages, rent, and materials, that a company incurs in conducting its business.

Implicit Costs

Costs that represent the opportunity cost of using resources that a business already owns, rather than explicit outlays of cash.