Question

1.Economic profit is:A)less than accounting profit if implicit costs exist.B)always equal to accounting profit.C)greater than accounting profit if implicit costs exist.D)less than accounting profit if implicit costs are zero.

Answer 1

D)less than accounting profit if implicit costs are zero.

Step-by-step explanation:

The formula to compute the economic profit is shown below:

The computation of the economic profit is shown below:

Economic profit = Total revenues - explicit cost - implicit cost

where,

Accounting profit = Total revenues - explicit cost

As we can see that

If implicit cost is positive so accounting profit is more than the economic profit and if implicit cost is zero than the accounting profit = economic profit