Asked by
Shawn Bishoff
on Nov 25, 2024Verified
Economic profit is found by subtracting accounting costs from total revenue.
Economic Profit
The return flowing to those who provide the economy with the economic resource of entrepreneurial ability; the total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called “pure profit” and “above-normal profit.”
Accounting Costs
The explicit costs of running a business, such as wages, rent, and materials, recorded in the financial statements.
Total Revenue
The total amount of money received by a firm from sales of its products or services before any expenses are subtracted.
- Disentangle the notion of profits from an economic perspective as opposed to an accounting viewpoint.
Verified Answer
KR
Learning Objectives
- Disentangle the notion of profits from an economic perspective as opposed to an accounting viewpoint.