Question

Accounting profit is profit calculated using only the ________ incurred by the firm. implicit cost economic cost explicit cost accounting cost

Answer 1

Accounting profit is profit calculated using only the explicit costs incurred by the firm. Explicit costs are all costs that are considered to be out-of-pocket costs. These costs can include materials, salaries, rent and more. Implicit costs are opportunity costs to the firm of resources that are already owned by the company such as expanding the work building on land that has already been purchased.