Question

________ profit is the firm's total revenue less its explicit costs, whereas ________ profit is the firm's total revenue less economic costs (explicit and implicit).

Answer 1

Accounting profit is the firm's total revenue minus explicit costs, whereas economic profit is the firm's total revenue minus economic costs (explicit and implicit).

Step-by-step explanation:

Profit is the difference between revenues and costs. Accounting profit is the firm's total revenue minus its explicit costs, which include the actual cash payments made. Economic profit, on the other hand, considers both explicit and implicit costs, such as the opportunity cost of using company resources. It is calculated as the firm's total revenue minus total cost.