Question

Economic profit is defined as _____ Question 17 options: a) total revenue plus what must be paid to resources to attract them from their best alternative use. b) total revenue divided by what must be paid to resources to attract them from their best alternative use. c) the price of the goods sold minus the quantity of goods sold. d) total revenue minus what must be paid to resources to attract them from their best alternative use. e) total revenue minus the cost of the goods produced.

Answer 1

d) total revenue minus what must be paid to resources to attract them from their best alternative use.

Step-by-step explanation:

In Financial accounting, the total operating income can be defined as the sum total of the profit of a business firm (company) after its regular, recurring costs and expenses have been deducted. Thus, it's the amount of revenue generated by a business firm (company) after subtracting all operating expenses and cost of goods sold (COGS).

Mathematically, the total operating income of a business is calculated by subtracting the indirect expenses incurred by the business firm from its total direct operating margin.

On a related note, profit is calculated by subtracting the cost price of an item from the selling price of the item. Thus, a profit is generated when the operating costs are subtracted from the total revenue generated.

In conclusion, economic profit is defined as total revenue minus what must be paid to resources to attract them from their best alternative use.