Accounting profits equal total revenue minus:

A) total explicit costs.
B) total implicit costs.
C) total economic costs.
D) economic profits.

Question

Accounting profits equal total revenue minus:A)  total explicit costs.B)  total implicit costs.C)  total economic costs.D)  economic profits.

Stephanie Garza · Accepted Answer

Final Answer : A, Explanation :  Accounting profits only take into account explicit costs, which are the actual out of pocket expenses incurred by the firm such as wages, rent, and supplies. Therefore, accounting profits are calculated by subtracting total explicit costs from total revenue. Implicit costs, such as the opportunity cost of foregone alternative uses of resources, are not included in accounting profits. Economic costs, which includes both explicit and implicit costs, provide a more complete picture of a firm's true cost of production. Economic profits would be the difference between total revenue and total economic costs.

Accounting profits equal total revenue minus:

A) total explicit costs.
B) total implicit costs.
C) total economic costs.
D) economic profits.

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